Description: Articles on IRS private letter rulings on combination products, IRS treatment of reinsurance under section 845, and IRS waivers for failed contracts under section 7702.

Description: On June 30, 2015, the U.S. Tax Court reaffirmed the viability of the Investor Control Doctrine in Webber v. Commissioner. The case serves as a valuable example of what not to do with regard to the investment of assets supporting a variable life insurance contract purchased through a private placement transaction. In the end, however, the Webber court leaves a lot of questions unanswered—most significantly, the elusive answer to how to define investor control. This article examines the Investor Control Doctrine, as explained and applied by the U.S. Tax Court in Webber, and considers some of the open questions that remain after June 30, 2015.

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: The IRS believes that any segregated asset account comprised of a pool of individual securities will run afoul of the investor control doctrine. This article articulates that such a conclusion would be deeply flawed based on the administrative, congressional, and judicial precedents involving the investor control doctrine.

Description: This article discusses tax rates used in computing toll charges for closing agreements with respect to corrections under IRS section 7702.

Description: A discussion of the PLR that addresses a Wellness Rider that an affiliated group of life insurance companies proposed to offer only on a prospective basis with newly issued life insurance contracts.

Description: This article discusses a new procedure for correcting inadvertent failures to satisfy the diversification requirements applicable to variable annuity and life insurance contracts under section 817h of the Internal Revenue Code.

Description: This article discusses the implications of a principle-based reserve PBR system with respect to federal income taxation of life insurance companies, particularly with respect to tax reserves and their deductibility for tax purposes. The article discusses potential problems with existing tax rules for reserve deduction, what courses of action the IRS could take, and suggestions for design features of a PBR approach that would make it more consistent with current tax rules. Life insurance product tax implications are also discussed.

Description: This article reviews the definition of “cash surrender value” in section 7702f2A and in the regulations proposed under that provision but never finalized. The discussion then recaps the 2005 Rulings and describes the recently issued letter rulings.

Description: The article summarizes the provisions of H.R. 1 that impact the tax qualification of life insurance contracts and the tax reporting of life settlements