The petitioner issued residual value insurance policies that insured lessors and lenders against not properly estimating the residual value of leased property at the end of the lease term. Such policies insure the expected residual value remaining on an asset at the end of a lease. The petitioner utilized the accounting rules of I.R.C. Sec. 832 applicable to insurers. However, the IRS claimed that the petitioner was not an insurance company and that the policies they issued were merely a hedge against investment risk rather than truly insurance. As a result, the IRS claimed that the I.R.C. Sec. 832 rules were inapplicable and that the petitioner had to use the rules contained in I.R.C. Secs. 451 and 461 resulting in a $55 million deficiency. The IRS also cited Tech Adv. Memo. 201149021 (Aug. 30, 2011) to support its position. The states that the petitioner operated in regulated the petitioner as an insurance company, and Fitch, Moody’s and S&P rated the petitioner as an insurer. The petitioner offered evidence that it insured against “low frequency/high severity” risks such as earthquakes or floods,” but the IRS claimed that the risk was illusory. The court rejected the IRS position because of evidence showing risk-shifting and risk-distribution. A real risk of loss was being covered. In addition, the court noted that every state in which the petitioner did business the state regulates the petitioner as an insurer. R.V.I. Guaranty Co., Ltd. & Subsidiaries, 145 T.C. 9 (2015).