CIA.Taxes

Question 1

Define the asset for future income taxes

Answer 1

Represents pre-pmt of taxes arising since tax credit taken for losses is less than the actual B/S losses.

Question 2

Calculate the estimates effect of discounting the asset for future income taxes.

Answer 2

Discounting effect = (RR - 95%min(RR, APV))(Tax Rate)*(1-PVfctr)
RR is the reported reserve = net claim liability (net APV)
APV is net discounted estimate with PfADs
PVfctr = (PV + PfAD(int)) / Net undiscounted estimate