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 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: This article discusses key tax issues that exist under current law with respect to asset rebalancing and hedging transactions that an insurance company might undertake.

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.