TAX odomirok 26

Question 1

3 components to discount reserves

identify

where they come from

Answer 1

Undiscounted loss rsvs: schedule P part 1 + tabular discounts (schedule P part 1 is net tabular & gross non-tabular (includes tabular) + exc non-tabular)

Discount rate: (determine for each AY - 60 mth moving avg of fed midterm rates)

Pmt pattern: industry schedule P part I (different partten every 5 years) OR company yschedule P part I (different pattern every year i.e. use 2018 annual statement for 2020AY)

Question 2

Describe tax adjustment for EP required by IRS and why

Answer 2

SAP: DAC don’t exist → recognize cost immediately bc funds wouldn’t be available in insolvency → temporary loss →future tax refund on loss

why: Avoid tax refund by revenue offset aka reduce UEP liability by 20%

Question 3

Describe tax adjustment for incurred losses required by IRS and why

Answer 3

SAP: incurred losses are based on undiscounted rsvs→ temporary loss →future tax refund on loss

why: avoid tax refund by discounting loss reserves

Question 4

Answer 4

Question 5

Answer 5

Question 6

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Question 7

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Question 8

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Question 9

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Question 10

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Question 11

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Question 12

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Question 13

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Question 14

Answer 14