Description: The article discusses the practical impact of recently Rev. Rul. 2014-7, which modified and supercedes Rev. Rul. 2007-54 by republishing the position of what variable annuity contract reserves are taken into for tax purposes without addressing the issue of how to calculate required interest for separate accounts; Rev. Rul. 2014-7 also obsoleted Rev. Rul. 2007-61, which had suspended Rev. Rul. 2007-54.

Description: A discussion of risk and tax risk.

Description: In March 2010, Congress codified the judicial economic substance doctrine in an effort to raise revenue as part of the health care reform legislation.1 The law provides for strict liability penalties of 20 percent for understated taxes and refund claims that result from transactions that lack economic substance. In July 2011, the commissioner of the Large Businessand International Division LB&I of the IRS evidently recognized this state of uncertainty and issued very helpful guidance to all LB&I examiners to fill the void on guidance for economic substance..

Description: This article discusses new tax reporting requirements for transfers for value under section 6050Y. It also discusses changes to the transfer for value rule of section 101(a)(2) and (3), including the definition of a reportable policy sale.

Description: On June 26, 2013, the Supreme Court released its decision in the case of United States v. Windsor, Executor of the Estate of Spyer, et al. addressing the constitutionality of the federal Defense of Marriage Act (“DOMA”). This article explores the implications for life insurance and annuity contract spousal provisions that are governed by federal law.

Description: Discussions on: 1. tax deductability of surrender losses of life insurance contracts 2. the IRS questioning of the immediate drop in asset values for variable product valuations 3. the analysis of risk distribution in the context of reinsurance and 4. Life Company Net Operating Loss NOL Carryback.

Description: The Internal Revenue Service issued its seminal ruling interpreting Internal Revenal Code section 7702A[c][3][B][i], commonly referred to as the Necessary Premium Test [NPT]. The purpose of the NPT is to shelter certain death benefit increases from material change status, avoiding the 7 pay test's reapplication on their account.

Description: On April 24, 2015, Treasury and the Internal Revenue Service (IRS) published proposed regulations (REG-108214-15) that provide guidance regarding when a foreign insurance company’s income is excluded from the definition of passive income under Section 1297(b)(2)(B). The proposed regulations are directed at hedge funds that purport to establish a foreign reinsurance company in an effort to avoid treatment as a passive foreign investment company (PFIC), but could have unintended consequences for traditional insurance companies.

Description: Actuary/accountant/tax attorney dialogue on recent guidance issued regarding treatment of deficiency reserves with respect to the “statutory reserves cap” of Internal Revenue Code section 807(d)(1).

Description: Congress has acted in recent years to remove outdated provisions governing the federal income taxation of life insurance companies from the Internal Revenue Code. In particular, section 809 and section 815 were repealed and suspended, respectively, in 2004. This article chronicles the demise of these provisions and explains why Congress was right in removing them from the Code.