Description: This paper points out errors in the Graetz Prepayment Analysis used to determine tax liability for mutual companies. Those errors result in an understatement of the tax burden borne by mutual life insurance companies. The Graetz prepayment analysis was advanced as a justification for repealing Section 809 of the Internal Revenue Code. Correcting the errors in the Graetz prepayment analysis strengthens the argument for repeal.

Description: The article provides an overview of the federal tax treatment of long-term care insurance contracts, including a brief history of the tax treatment of long-term care insurance, the requirements that must be satisfied in order to be treated as qualified long-term care insurance under the Internal Revenue Code, and a brief discussion of qualified long-term care combination products and chronic and terminal illness accelerated death benefits offered under life insurance contracts.

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: The article discusses the impact of changes made to Internal Revenue Code Section 7702 by the ConsolidatedAppropriations Act, 2021. The Consolidated Appropriations Act made changes to the interest rates used calculatethe Section 7702 premium and cash value funding limitations for life insurance contracts

Description: The Internal Revenue Code includes certain rules that apply when a taxpayer has a change in method of accounting. A special rule applies when a life insurance company changes its basis of computing reserves. The article discusses two recent court cases, Bosamia v. Commissioner and Capital One Financial Corp. v. Commissioner, that address change-in-method-of-accounting issues. The article examines whether and how the courts' conclusions in these two cases might apply to changes in basis of computing reserves to correct errors.

Description: From a session at a meeting of the Society of Actuaries held in San Diego, CA, June 22-23, 2000 This discussion reviews the need for and a process for remediation of errors made with respect to an inadvertent non-egregious failure to comply with the modified endowment contract rules under Internal Revenue Code Section 7702A.

Description: An explanation of the reasons why the IRS should rule on the application of section 351 to the transfer of assets and reserves in an indemnity coinsurance transaction where the ceding company transfers more assets to the assuming company than it would in an arms-length transaction and, therefore, the ceding company actually receives or is deemed to receive stock in the exchange for the transferred assets including the value of insurance in force. We also will summarize other interesting rulings in the PLR.

Description: Discussion of recent developments in the taxation of noncoordinated benefits such as fixed indemnity, hospital indemnity, and specified disease insurance policies. Developments include a recent Chief Counsel Advice Memorandum and proposed triagency rulemaking that would impact non coordinated benefits.

Description: The article focuses on the policyholder tax considerations specific to various types of contracts sold by life insurance companies. When evaluating merger and acquisition or reinsurance transactions, buyers need to be aware of the product tax compliance (PTC) requirements and evaluate any associated risks

Description: Summary of Administration's FY 2023 Tax Proposals of Interest to Life Insurers