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Final regulations: Modification of discounting rules for insurance companies

Modification of discounting rules, insurance companies

The U.S. Treasury Department and IRS this afternoon released for publication in the Federal Register final regulations (T.D. 9863) as guidance with regard to discounting insurance companies’ unpaid losses and estimated salvage recoverable for federal income tax purposes. The final regulations reflect measures that were enacted by the 2017 U.S. tax law (Pub. L. No. 115-97 that is often referred to as the “Tax Cuts and Jobs Act” (TCJA)).


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The final regulations [PDF 211 KB] as published in the Federal Register on June 17, 2019.

In brief

The discounting rules of section 846, both prior to and after amendment by the TCJA, are used to determine discounted unpaid losses and estimated salvage recoverable of property and casualty insurance companies and discounted unearned premiums of title insurance companies for federal income tax purposes under section 832, as well as discounted unpaid losses of life insurance companies for federal income tax purposes under sections 805(a)(1) and 807(c)(2).

  • Treasury and the IRS issued proposed regulations under section 846 in November 2018. Read TaxNewsFlash

  • The IRS issued Rev. Proc. 2019-06 to provide the unpaid loss discount factors and salvage discount factors for the 2018 accident year. Read TaxNewsFlash

The preamble to today’s final regulations states that Treasury and the IRS received comments with regard to the proposed regulations and Rev. Proc 2019-06, and that the proposed regulations have been adopted with certain amendments.

The purpose of this report is to provide text of the final regulations.

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