United States v. Occidental Life Insurance Company of California, a California Corporation

The Government appeals from a District Court judgment which awarded taxpayer a refund of federal income taxes for the taxable years 1954 and 1955. Suit was instituted by the taxpayer pursuant to 28 U.S.C. § 1346 (a) (1) after its claims for refund had been rejected. Our jurisdiction rests upon 28 U.S.C. § 1291 .

The taxpayer is a stock life insurance company. For taxable years beginning in 1954, such companies were subject to a tax equal to certain percentages of “1954 life insurance company taxable income.” Section 805(a) of the Internal Revenue Code of 1954, ch. 736, 68A Stat. 258, provided that “the term ‘1954 life insurance company taxable income’ means the taxable income * * *, plus 8 times the amount of the adjustment for certain reserves provided in section 806, and minus the reserve interest credit * * Computation of the “adjustment for certain reserves” was fixed in section 806 of the Code, which provided:

Int.Rev.Code of 1954, § 806, ch. 736, 68A Stat. 259 (formerly Int.Rev.Code of 1939, § 202(c), as amended, ch. 619, § 163(a), 56 Stat. 870 (1942)).

In computing its “adjustment for certain reserves” so as to determine its taxable income for the year 1954, the taxpayer…