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: Addresses the question: “If it is accepted that reserves should be pre-tax, why should required capital be post-tax?”

Description: This paper will provide demonstrations of the following three statements: That the calculation of principles-based reserves should ignore federal income taxes That the currently required statutory deferred tax calculation would need to be changed to permit an appropriate deferred tax asset to accompany such reserve so that the result can be correctly principles-based on a post-tax basis That the Tax DAC, pursuant to Section 848 of the Internal Revenue Code, is effectively a negative tax reserve.