FEDERAL CIRCUIT AGREES WITH FINDING OF TRUE INSURANCE BETWEEN OIL & GAS COMPANY AND ITS SUBSIDIARY.

DECIDED: March 9, 1993

Before Nies, Chief Judge, Archer and Clevenger, Circuit Judges.

PER CURIAM.

The United States appeals the judgment of the United States Claims Court ¹ in Ocean Drilling & Exploration Co. v. United States, 24 Cl. Ct. 714 (1991). The issues appealed by the government are: (1) whether the Claims Court erred in holding that payments made by Ocean Drilling & Exploration Company (ODECO) (on behalf of its operating subsidiaries) to Mentor Insurance Limited (Mentor), a wholly-owned subsidiary of ODECO, constituted true insurance premiums that are deductible as business expenses under section 162 of the Internal Revenue Code of 1954, as amended (IRC), ² and (2) if properly classified as insurance premiums, whether Mentor's income from insuring the drilling rigs of ODECO's subsidiaries located in waters of the outer continental shelf of the United States constituted income from the insurance of United States risks within the meaning of sections 951-953 of the IRC.

We adopt the analysis and holding on these issues as set forth in the Claims Court's opinion, which is attached as an appendix. Accordingly, the judgment of the Claims Court is

AFFIRMED.

² All references are to the Internal Revenue Code of 1954, as amended, because the tax years involved in this proceeding are 1974 and 1975. See 26 U.S.C. sections 162, 951-953 (1988).