I assume your facts come under 162 rather than 165. That linked CCA is, in my opinion, weak in its 162 analysis and conclusion. It is not, of course, authoritative.
This advice may not be used or cited as precedent.
. But it deserves parsing.
RR 79-263 - "knows he will be reimbursed". You don't know.
Charles Baloian case - "when the right has matured without further substantial contingency". You have contingency.
Manocchio, Glendinning, and Webbe - "written agreements specifically providing that the taxpayers’ expenses were to be reimbursed or written statements from a third party authorizing the taxpayer to incur the expenses". insurance policy does not fit those descriptions.
RR 78-388 - "moving expenses for which the taxpayer has a fixed right of reimbursement". Not comparable to your insurance policy. Former is objective, latter subjective.
Levy - 'owner nonetheless agreed to pay and requested that the bills be forwarded. The taxpayer instead paid for additional repairs and notified the owner, but received no reimbursement". No pre-authorization in the insurance policy.
There follows this paragraph, which gets very little credence or weight, but it should.
If the right to reimbursement is not fixed, the deduction may be allowed. See George K. Herman Chevrolet, Inc. v. Commissioner , 39 T.C. 846, 853 (1963) (taxpayer had no right to reimbursement at the time the expenses were incurred); Allegheny Corporation v. Commissioner , 28 T.C. 298, 305 (1957), acq. , 1957-2 C.B. 3 (deduction not precluded by contingent possibility of future reimbursement from assets of debtor of legal fees and costs for representation in bankruptcy proceeding). In Electric Tachometer Corporation v. Commissioner , 37 T.C. 158, 161-162 (1961), acq. , 1962-2 C.B. 4, the taxpayer was allowed a deduction in the year expenses were paid for moving machinery as the result of a condemnation action because there was no fixed right of reimbursement but only an indefinite and general right to recover its expenses. The court concluded that, although the taxpayer had a general right to reimbursement of moving expenses, conflicting evidence at hearings to determine the amount of compensation indicated the lack of definiteness of the taxpayer’s right. In Varied Investments, Inc. v. United States , 31 F.3d 651, 653 (8 th Cir. 1994), a taxpayer was allowed a deduction under section 162 in the taxable year it transferred money to a trust to provide for the satisfaction of a judgment after three insurers denied liability, even though the taxpayer recovered some insurance proceeds in subsequent years.
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They pre-determined their desired result. At least, I think they did.