Amerco, Inc. Republic Insurance v. Commissioner Internal Revenue Service

AMERCO and a number of its subsidiaries (AMERCO Group) purchased insurance policies from Republic Western Insurance Company (Republic) and deducted the pre-: miums for income tax purposes. Republic was a subsidiary of AMERCO. The Commissioner of Internal Revenue (Commissioner) determined that because of the relationships among the parties the transactions did not constitute insurance. A notice of deficiency was issued by the Commissioner, and AMERCO petitioned the Tax Court for a redetermination. The Tax Court found that the transactions were insurance. It, therefore, held against the Commissioner, who now appeals. We affirm.

BACKGROUND

The AMERCO Group constitutes the U-Haul system. AMERCO itself is a holding company which owns the stock of a number of subsidiaries. Among those subsidiaries are U-Haul International, Inc., the administrative clearing house, AMERCO Lease Co., which owns much of the U-Haul rental equipment, and numerous other rental companies, repair shops, manufacturing companies and service companies. Approximately 250 of these joined in AMERCO’s consolidated returns for the tax years in question — 1979-85.

Republic was incorporated in 1973. It is a third tier…