Panel Discussion Tax Considerations for the Life Insurance Actuary PDF
Preview Panel Discussion Tax Considerations for the Life Insurance Actuary
Session 06PD: Tax Considerations for the Life Insurance Actuary Moderator: Brian Prast FSA,MAAA Presenters: Graham Green Brian McBride FSA,MAAA Brian Prast FSA,MAAA SOA Antitrust Disclaimer SOA Presentation Disclaimer 2017 Valuation Actuary Symposium Moderator: Brian Prast, FSA, MAAA Presenters: Graham R. Green,JD, LLM Brian McBride,FSA, MAAA Brian Prast, FSA, MAAA Tax Considerations for the Life Actuary August 28, 2017 Disclaimer • This presentation is provided solely for the purpose of enhancing knowledge on tax matters. It does not provide tax advice to any taxpayer because it does not take into account any specific taxpayer’s facts and circumstances. • These slides are for educational purposes only and are not intended, and should not be relied upon, as accounting advice. • Presentations are intended for educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the participants individually and, unless expressly stated to the contrary, are not the opinion or position of the Society of Actuaries, its cosponsors, or its committees. The Society of Actuaries does not endorse or approve, and assumes no responsibility for, the content, accuracy or completeness of the information presented. Attendees should note that sessions are audio- recorded and may be published in various media, including print, audio and video formats without further notice. • The views expressed by the presenters are not necessarily those of KPMG, Kansas City Life Insurance Company, MassMutual Financial Group, or of Eversheds Sutherland (US) LLP. 2 Agenda • Tax policy and the regime for taxing life insurance companies • Basic Tax Reserve Topics • Additional Reserve Topics • Principle-Based Reserves and 2017 CSO: Tax Reserve Issues • IRS Examination Process • Other Topics • Tax Authorities & Resources • Tax Reform • Summary 3 Tax policy and the regime for taxing life insurance companies 4 Principles of Tax Policy • Equity • Horizontal Equity • Vertical Equity • Efficiency • Administrability 5 Regime of Taxing Life Insurers • Life Insurance Company Taxable Income (LICTI) subject to tax under § 801 at corporate rates • LICTI • Life Insurance Gross Income minus • Life Insurance Deductions • Life Insurance Gross Income • Premiums plus • Decreases in reserves (§ 803(a)(2)) • Life Insurance Deductions • Death benefits plus • Increases in reserves (§ 805(a)(2)) 6 Regime for Taxing Life Insurers – Methods of Accounting • Taxpayers generally • General Rule § 446(a): Start with book (e.g., GAAP) • Tax Override § 446(b): Clear reflection of income • Insurers specifically § 811(a) • Start with book/statutory accounting consistent with NAIC Annual Statement • Modify for tax purposes 7 Basic Tax Reserve Topics 8 Statutory vs. Tax Reserves • Statutory Reserves • Solvency • Minimum Standards • Movement towards Principle-Based Reserves (PBR) - AG43/VM-21 reserves for Variable Annuities - VM-20 for Life • Tax Reserves • Start with statutory reserve assumptions • Adjust as required by Internal Revenue Code (IRC) • Final tax reserve is less than or equal to statutory reserve • This “inefficiency” results in higher taxable income 9
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