Description: Many life insurance companies that issue participating policies follow business practices that they argue allow them a deduction for tax purposes for policyholder dividends in the year prior to actual payment. This article discusses several recent developments related to policyholder dividend accruals, including Revenue Ruling 2011-29 and the New York Life and MassMutual cases, and highlights the four arguments commonly made by the IRS in challenging companies' claimed tax treatment of such dividends.

Description: The U.S. Technical and Miscellaneous Revenue Act of 1988 has created a very significant administrative problem for companies having a large block of “grandfathered” universal life business. The problem is that seemingly harmless future changes in benefits are categorized as “material changes,” causing a policy to lose its grandfather status and subjecting it to the “modified endowment” rules.

Description: Update on industry action on legislative and tax regulatory items affecting the life insurance industry.

Description: On Nov. 2, 2018, the Internal Revenue Service (IRS) released Technical Advice Memorandum 201844009 (the TAM).

Description: The author uses a reprint of an article from the very first edition of the “News from the Individual Life Insurance and Annuity Product Development Section” and assistance from the Taxation Section Council and Friends of that Council to decipher the changes between the life insurance tax environment back in the 1980s compared to today.

Description: Overview of latest developments on IRC Section 7702, IRC Section 848, market value adjusted contracts, companies in rehabilitation and Canadian issues including: • Part I income tax • Part IV capital tax

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: Over the past few years, the Internal Revenue Service has issued two private letter rulings waiving the failure of certain fixed-premium universal life insurance FPUL contracts to satisfy the guideline premium test GPT under section 7702 of the Internal Revenue Code [see PLR 200328027 Apr. 10, 2003 and PLR 200230037 Apr. 30, 2002].

Description: This article summarizes the government guidance for protected cells in the insurance context and the ABA Recommendation, and comments on the Notice and ABA Recommendation in light of traditional notions of equity ownership for federal corporate income tax purposes.

Description: A discussion of new IRS rulings with respect to the taxation of life settlement transactions.