Bulletin No. 1996–35
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Bulletin No. 1996–35
August 26, 1996
HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be relied
upon as authoritative interpretations.
INCOME TAX
Rev. Rul. 96–42, page 4.
Mutual life insurance companies; differential earnings rate. The differential earnings rate for 1995 and
the recomputed differential earnings rate for 1994 are
set forth for use by mutual life insurance companies to
compute their income tax liabilities for 1995.
Notice 96–41, page 6.
1996 section 43 inflation adjustment factor. This
notice announces the inflation adjustment factor to be
used in determining the enhanced oil recovery credit for
tax years beginning in the 1996 calendar year.
Notice 96–42, page 6.
1996 marginal production rates. This notice announces the applicable percentage to be used in determining percentage depletion for marginal properties for
the 1996 calendar year.
EXEMPT ORGANIZATIONS
Announcement 96–80, page 16.
A list is given of organizations now classified as private
foundations.
ADMINISTRATIVE
Rev. Proc. 96–43, page 6.
Section 355 ‘‘No Rule.’’ This procedure amplifies the
‘‘No Rule’’ Rev. Proc. 96–3, 1996–1 I.R.B. 82, to
Finding Lists begin on page 17.
include certain transactions under section 355 of the
Code.
Rev. Proc. 96–44, page 7.
Insurance companies; loss reserves; discounting unpaid losses. The loss payment patterns and discount
factors are set forth for the 1996 accident year. These
factors will be used for computing discounted unpaid
losses under section 846 of the Code.
Rev. Proc. 96–45, page 12.
Insurance companies; discounting estimated salvage
recoverable. The salvage discount factors are set forth
for the 1996 accident year. These factors will be used
for computing estimated salvage recoverable under section 832 of the Code.
Announcement 96–77, page 15.
Backup withholding; substitute Form W–9. The effective date of Rev. Proc. 96–26, 1996–8 I.R.B. 22, is
extended for certain payors who must secure regulatory
approval of changes to their substitute Forms W–9.
Announcement 96–78, page 15.
T.D. 8670, 1996–24 I.R.B. 6, relating to qualified cost
sharing arrangements, is corrected.
Announcement 96–79, page 15.
T.D. 8671, 1996–26 I.R.B. 8, relating to requirements
for furnishing a taxpayer identifying number on returns,
statements, and other documents, is corrected.
Mission of the Service
The purpose of the Internal Revenue Service is to
collect the proper amount of tax revenue at the least
cost; serve the public by continually improving the
quality of our products and services; and perform in a
manner warranting the highest degree of public
confidence in our integrity, efficiency and fairness.
Statement of Principles
of Internal Revenue
Tax Administration
The Service also has the responsibility of applying
and administering the law in a reasonable,
practical manner. Issues should only be raised by
examining of ficers when they have merit, never
arbitrarily or for trading purposes. At the same
time, the examining officer should never hesitate
to raise a meritorious issue. It is also important
that care be exercised not to raise an issue or to
ask a court to adopt a position inconsistent with
an established Service position.
The function of the Internal Revenue Service is to
administer the Internal Revenue Code. Tax policy
for raising revenue is determined by Congress.
With this in mind, it is the duty of the Service to
carry out that policy by correctly applying the laws
enacted by Congress; to determine the reasonable
meaning of various Code provisions in light of the
Congressional purpose in enacting them; and to
perform this work in a fair and impartial manner,
with neither a government nor a taxpayer point of view.
Administration should be both reasonable and
vigorous. It should be conducted with as little
delay as possible and with great cour tesy and
considerateness. It should never try to overreach,
and should be reasonable within the bounds of law
and sound administration. It should, however, be
vigorous in requiring compliance with law and it
should be relentless in its attack on unreal tax
devices and fraud.
At the heart of administration is interpretation of the
Code. It is the responsibility of each person in the
Service, charged with the duty of interpreting the
law, to try to find the true meaning of the statutory
provision and not to adopt a strained construction in
the belief that he or she is ‘‘protecting the revenue.’’
The revenue is properly protected only when we ascertain and apply the true meaning of the statute.
2
Introduction
The Internal Revenue Bulletin is the authoritative instrument of the Commissioner of Internal Revenue for
announcing official rulings and procedures of the Internal Revenue Service and for publishing Treasury Decisions, Executive Orders, Tax Conventions, legislation,
court decisions, and other items of general interest. It is
published weekly and may be obtained from the Superintendent of Documents on a subscription basis. Bulletin
contents of a permanent nature are consolidated semiannually into Cumulative Bulletins, which are sold on a
single-copy basis.
court decisions, rulings, and procedures must be considered, and Service personnel and others concerned are
cautioned against reaching the same conclusions in
other cases unless the facts and circumstances are
substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on
provisions of the Internal Revenue Code of 1986.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform
application of the tax laws, including all rulings that
supersede, revoke, modify, or amend any of those
previously published in the Bulletin. All published rulings
apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management
are not published; however, statements of internal
practices and procedures that affect the rights and
duties of taxpayers are published.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows:
Subpart A, Tax Conventions, and Subpart B, Legislation
and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to
these subjects are contained in the other Parts and
Subparts. Also included in this part are Bank Secrecy
Act Administrative Rulings. Bank Secrecy Act Administrative Rulings are issued by the Department of the
Treasury’s Office of the Assistant Secretary (Enforcement).
Revenue rulings represent the conclusions of the Service on the application of the law to the pivotal facts
stated in the revenue ruling. In those based on positions
taken in rulings to taxpayers or technical advice to
Service field offices, identifying details and information
of a confidential nature are deleted to prevent unwarranted invasions of privacy and to comply with statutory
requirements.
Part IV.—Items of General Interest.
With the exception of the Notice of Proposed Rulemaking and the disbarment and suspension list included in
this part, none of these announcements are consolidated in the Cumulative Bulletins.
Rulings and procedures reported in the Bulletin do not
have the force and effect of Treasury Department
Regulations, but they may be used as precedents.
Unpublished rulings will not be relied on, used, or cited
as precedents by Service personnel in the disposition of
other cases. In applying published rulings and procedures, the effect of subsequent legislation, regulations,
The first Bulletin for each month includes an index for
the matters published during the preceding month.
These monthly indexes are cumulated on a quarterly and
semiannual basis, and are published in the first Bulletin
of the succeeding quarterly and semi-annual period,
respectively.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
For sale by the Superintendent of Documents U.S. Government Printing Office, Washington, D.C. 20402.
3
Part I. Rulings and Decisions Under the Internal Revenue Code of 1986
Section 355.—Distribution of Stock
and Securities of a Controlled
Corporation
26 CFR 1.355–3: Active conduct of a trade or
business.
The revenue procedure amplifies the ‘‘No Rule’’
revenue procedure, Rev. Proc. 96–3, 1996–1 I.R.B.
82, to include certain transactions under § 355 of
the Code. See Rev. Proc. 96–43, page 6.
Section 809.—Reduction in Certain
Deductions of Mutual Life
Insurance Companies
26 CFR 1.809–9: Computation of the differential
earnings rate and the recomputed differential
earnings rate.
Mutual life insurance companies;
differential earnings rate. The differential earnings rate for 1995 and the
recomputed differential earnings rate for
1994 are set forth for use by mutual life
insurance companies to compute their
income tax liabilities for 1995.
Rev. Rul. 96–42
This revenue ruling contains the differential earnings rate for 1995 and the
recomputed differential earnings rate for
1994. Under § 809 of the Internal Revenue Code, mutual life insurance companies use these rates in computing their
Federal income tax liability for taxable
years beginning in 1995. This revenue
ruling also contains the figures on which
the determinations of these rates are
based. Notice 96–15, 1996–13 I.R.B. 19,
contained tentative determinations of
these rates.
Section 809(a) provides that, in the
case of any mutual life insurance company, the amount of the deduction allowable under § 808 for policyholder
dividends is reduced (but not below
zero) by the ‘‘differential earnings
amount.’’ Any excess of the differential
earnings amount over the amount of the
deduction allowable under § 808 is
taken into account as a reduction in the
closing balance of reserves under subsections (a) and (b) of § 807. The
‘‘differential earnings amount’’ for any
taxable year is the amount equal to the
product of (a) the life insurance company’s average equity base for the taxable
year multiplied by (b) the ‘‘differential
earnings rate’’ for that taxable year. The
‘‘differential earnings rate’’ for the taxable year is the excess of (a) the
‘‘imputed earnings rate’’ for the taxable
year over (b) the ‘‘average mutual earn-
ings rate’’ for the second calendar year
preceding the calendar year in which the
taxable year begins. The ‘‘imputed earnings rate’’ for any taxable year is the
amount that bears the same ratio to 16.5
percent as the ‘‘current stock earnings
rate’’ for the taxable year bears to the
‘‘base period stock earnings rate.’’
Section 809(f) provides that, in the
case of any mutual life insurance company, if the ‘‘recomputed differential
earnings amount’’ for any taxable year
exceeds the differential earnings amount
for that taxable year, the excess is
included in life insurance gross income
for the succeeding taxable year. If the
differential earnings amount for any taxable year exceeds the recomputed differential earnings amount for that taxable
year, the excess is allowed as a life
insurance deduction for the succeeding
taxable year. The ‘‘recomputed differential earnings amount’’ for any taxable
year is an amount calculated in the same
manner as the differential earnings
amount for that taxable year, except that
the average mutual earnings rate for the
calendar year in which the taxable year
begins is substituted for the average
mutual earnings rate for the second
calendar year preceding the calendar
year in which the taxable year begins.
The stock earnings rates and mutual
earnings rates taken into account under
§ 809 generally are determined by dividing statement gain from operations
by the average equity base. For this
purpose, the term ‘‘statement gain from
operations’’ means ‘‘the net gain or loss
from operations required to be set forth
in the annual statement, determined
without regard to Federal income taxes,
and . . . properly adjusted for realized
capital gains and losses. . . .’’ See
§ 809(g)(1). The term ‘‘equity base’’ is
defined as an amount determined in the
manner prescribed by regulations equal
to surplus and capital increased by the
amount of nonadmitted financial assets,
the excess of statutory reserves over the
amount of tax reserves, the sum of
certain other reserves, and 50 percent of
any policyholder dividends (or other
similar liability) payable in the following taxable year. See § 809(b)(2), (3),
(4), (5) and (6). Section 1.809–10 of the
Income Tax Regulations provides that
the equity base includes both the asset
valuation reserve and the interest maintenance reserve for taxable years ending
after December 31, 1991.
4
Section 1.809–9(a) of the regulations
provides that neither the differential
earnings rate under § 809(c) nor the
recomputed differential earnings rate
that is used in computing the recomputed differential earnings amount under
§ 809(f)(3) may be less than zero.
For purposes of § 809, the differential earnings rate for 1995 and the rate
used to calculate the recomputed differential earnings amount for 1994 (the
recomputed differential earnings rate for
1994), and the figures on which these
two rates are based are set forth in
Table 1.
Rev. Rul. 96–42 TABLE 1
Determination of Rates To Be Used
For Taxable Years Beginning in 1995
Differential earnings rate for
1995. . . . . . . . . . . . . . . . . . . 0
Recomputed differential earnings rate for 1994 . . . . . . . . 5.887
Imputed earnings rate for
1994. . . . . . . . . . . . . . . . . . . 15.109
Imputed earnings rate for
1995. . . . . . . . . . . . . . . . . . . 12.625
Base period stock earnings
rate . . . . . . . . . . . . . . . . . . . . 18.221
Current stock earnings rate
for 1995. . . . . . . . . . . . . . . . 13.942
Stock earnings rate for 1992 . 7.004
Stock earnings rate for 1993 . 23.385
Stock earnings rate for 1994 . 11.437
Average mutual earnings rate
for 1993. . . . . . . . . . . . . . . . 18.406
Average mutual earnings rate
for 1994. . . . . . . . . . . . . . . . 9.222
DRAFTING INFORMATION
The principal author of this revenue
ruling is Katherine A. Hossofsky of the
Assistant Chief Counsel (Financial Institutions and Products). For further information regarding this revenue ruling
contact Ms. Hossofsky on (202) 6223477 (not a toll-free number).
Section 832.—Insurance Company
Taxable Income
26 CFR 1.832–4: Gross Income.
The salvage discount factors are set forth for the
1996 accident year. These factors will be used for
computing estimated salvage recoverable for purposes of section 832 of the Code. See Rev. Proc.
96–45, page 12.
Section 846.—Discounted Unpaid
Losses Defined
factors will be used for computing discounted
unpaid losses under section 846 of the Code. See
Rev. Proc. 96–44, page 7.
26 CFR 1.846–1: Application of discount factors.
The loss payment patterns and discount factors
are set forth for the 1996 accident year. These
The salvage discount factors are set forth for the
1996 accident year. These factors will be used for
5
computing estimated salvage recoverable for purposes of section 832 of the Code. See Rev. Proc.
96–45, page 12.
Part III. Administrative, Procedural, and Miscellaneous
1996 Section 43 Inflation
Adjustment
Notice 96–41
Section 43(b)(3)(B) of the Internal
Revenue Code requires the Secretary to
publish an inflation adjustment factor.
The enhanced oil recovery credit under
§ 43 for any taxable year is reduced if
the ‘‘reference price,’’ determined under
§ 29(d)(2)(C), for the calendar year preceding the calendar year in which the
taxable year begins is greater than $28
multiplied by the inflation adjustment
factor for that year.
The term ‘‘inflation adjustment factor’’ means, with respect to any calendar
year, a fraction the numerator of which
is the GNP implicit price deflator for the
preceding calendar year and the denominator of which is the GNP implicit price
deflator for 1990.
Because the reference price for the
1995 calendar year ($14.26) does not
exceed $28 multiplied by the inflation
adjustment factor for the 1996 calendar
year, the enhanced oil recovery credit
for qualified costs paid or incurred in
1996 is determined without regard to the
phase-out for crude oil price increases.
Table 1 contains the GNP implicit
price deflator used for the 1996 calendar
year, as well the previously published
GNP implicit price deflators used for the
1991 through 1995 calendar years.
Notice 96–41 TABLE 1
GNP IMPLICIT PRICE DEFLATORS
Calendar
GNP Implicit
Year
Price Deflator
1990
112.9 (used for 1991)
1991
117.0 (used for 1992)
1992
120.9 (used for 1993)
1993
124.1 (used for 1994)
1994
126.0 (used for 1995)
1995
107.5 (used for 1996)*
*Beginning in 1995, the GNP implict price deflator was rebased relative to 1992. The 1990 GNP implicit
price deflator used to compute the
1996 § 43 inflation adjustment factor is 93.6
Table 2 contains the inflation adjustment factor and the phase-out amount
for taxable years beginning in the 1996
calendar year as well as the previously
published inflation adjustment factors
and phase-out amounts for the 1991
through 1995 calendar years.
Notice 96–41 TABLE 2
INFLATION ADJUSTMENT
FACTORS AND
PHASE-OUT AMOUNTS
Inflation
Calendar
Adjustment Phase-out
Year
Factor
Amount
1991
1.0000
0
1992
1.0363
0
1993
1.0708
0
1994
1.0992
0
1995
1.1160
0
1996
1.1485
0
DRAFTING INFORMATION
DRAFTING INFORMATION
The principal author of this notice is
Brenda M. Stewart of the Office of
Assistant Chief Counsel (Passthroughs
and Special Industries). For further information regarding this notice contact
Ms. Stewart on (202) 622–3120 (not a
toll-free call).
26 CFR 601.201: Rulings and determination letters.
(Also §§ 355; 1.355–3.)
Rev. Proc. 96–43
SECTION 1. PURPOSE
1996 Marginal Production Rates
This revenue procedure amplifies Rev.
Proc. 96–3, 1996–1 I.R.B. 82, which
sets forth the areas of the Internal
Revenue Code under the jurisdiction of
the Associate Chief Counsel (Domestic)
and the Associate Chief Counsel (Employee Benefits and Exempt Organizations) relating to issues on which the
Internal Revenue Service will not issue
advance rulings or determination letters.
Notice 96–42
SECTION 2. BACKGROUND
Section 613A(c)(6)(C) of the Internal
Revenue Code defines the term ‘‘applicable percentage’’ for purposes of determining percentage depletion for oil and
gas produced from marginal properties.
The applicable percentage is the percentage (not greater than 25 percent)
equal to the sum of 15 percent, plus one
percentage point for each whole dollar
by which $20 exceeds the reference
price (determined under § 29(d)(2)(C))
for crude oil for the calendar year
preceding the calendar year in which the
taxable year begins. The reference price
determined under § 29(d)(2)(C) for the
1995 calendar year is $14.26.
Table 1 contains the applicable percentages for marginal production for
taxable years beginning in calendar
years 1991 through 1996.
Section 4 of Rev. Proc. 96–3 sets
forth those areas in which rulings or
determination letters will not ordinarily
be issued. Section 355(a) of the Internal
Revenue Code applies to distributions of
stock or securities of a corporation controlled by the distributing corporation if
each of the corporations is engaged in
the active conduct of a trade or business. Section 355(b) provides that a
corporation is engaged in such conduct
if, among other things, it is directly
engaged in the active conduct of a trade
or business, or substantially all of its
assets consist of stock and securities of
a corporation controlled by it (immediately after the transaction) which is so
engaged.
The principal author of this notice is
Brenda M. Stewart of the Office of
Assistant Chief Counsel (Passthroughs
and Special Industries). For further information regarding this notice contact
Ms. Stewart on (202) 622–3120 (not a
toll-free call).
Notice 96–42 TABLE 1
APPLICABLE PERCENTAGE FOR
MARGINAL PRODUCTION
Applicable
Calendar Year
Percentage
1991
15 percent
1992
18 percent
1993
19 percent
1994
20 percent
1995
21 percent
1996
20 percent
6
SECTION 3. PROCEDURE
Rev. Proc. 96–3 is amplified by adding to section 4 the following:
Section 355.—Distribution of Stock
and Securities of a Controlled Corporation.—Whether a distribution of stock or
securities is described in § 355(a)(1)
when the gross assets of the trades or
businesses relied on to satisfy the active
trade or business requirement of
§ 355(b) will have a fair market value
that is less than 5 percent of the total
fair market value of the gross assets of
the corporation directly conducting the
trades or businesses. The Service may
rule that the trades or businesses satisfy
the active trade or business requirement
of § 355(b) if it can be established that,
based upon all relevant facts and circumstances, the trades or businesses are
not de minimis compared with the other
assets or activities of the corporation
and its subsidiaries.
SECTION 4. EFFECTIVE DATE
This revenue procedure will apply to
all ruling requests postmarked or, if not
mailed, received on or after August 8,
1996.
FURTHER INFORMATION
For further information regarding this
revenue procedure contact Robert
Hawkes of the Office of Assistant Chief
Counsel (Corporate) at (202) 622–7530
(not a toll-free call).
26 CFR 601.201: Rulings and determination letters
(Also Part I, Sections 846; 1.846–1.)
SEC. 3. TABLES OF DISCOUNT
FACTORS
Rev. Proc. 96–44
.01 The following tables present
separately for each line of business the
discount factors under § 846 for accident year 1996. All the discount factors
presented in this section were determined using the applicable interest rate
under § 846(c) for 1996, which is 6.63
percent, and by assuming all loss payments occur in the middle of the calendar year.
SECTION 1. PURPOSE
This revenue procedure prescribes the
loss payment patterns and discount factors for the 1996 accident year. These
factors will be used for computing discounted unpaid losses under § 846 of
the Internal Revenue Code. See Rev.
Proc. 92–47, 1992–1 C.B. 980, for background concerning the loss payment
patterns and application of the discount
factors.
SEC. 2. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount its
unpaid losses under § 846 for a line of
business using discount factors published by the Secretary.
.02 If the groupings of individual
lines of business on the annual statement changes, taxpayers must discount
the unpaid losses on the resulting lines
of business in accordance with the discounting patterns that would have applied to those unpaid losses based on
their classification on the 1990 annual
statement.
.03 Tables
Tables of Discount Factors
Section 846
- 1996 Interest rate: 6.63 percent
Homeowners/Farmowners
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
66.8753
90.4633
93.3914
95.7081
97.4081
98.6271
99.1528
99.5425
99.7318
99.8063
N/A
N/A
N/A
66.8753
23.5880
2.9281
2.3167
1.7000
1.2190
0.5257
0.3897
0.1893
0.0745
0.0745
0.0745
0.0447
30.6325
8.3060
5.8331
3.8276
2.3259
1.2214
0.7595
0.4074
0.2390
0.1779
0.1127
0.0432
0.0000
33.1247
9.5367
6.6086
4.2919
2.5919
1.3729
0.8472
0.4575
0.2682
0.1937
0.1192
0.0447
0.0000
92.4763
87.0955
88.2656
89.1817
89.7376
88.9620
89.6468
89.0559
89.1020
91.8346
94.5850
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
34.7617
66.2963
81.2140
89.8272
94.4549
96.8788
34.7617
31.5346
14.9177
8.6132
4.6277
2.4239
58.9016
30.2435
16.8444
9.0671
4.8895
2.7107
65.2383
33.7037
18.7860
10.1728
5.5451
3.1212
90.2868
89.7336
89.6646
89.1303
88.1776
86.8495
Private Passenger Auto Liability/Medical
Continued on next page
7
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
98.1526
98.6962
99.0485
99.2667
N/A
N/A
N/A
N/A
1.2738
0.5436
0.3523
0.2182
0.2182
0.2182
0.2182
0.0787
1.5751
1.1182
0.8286
0.6582
0.4765
0.2828
0.0762
0.0000
1.8474
1.3038
0.9515
0.7333
0.5151
0.2969
0.0787
0.0000
85.2614
85.7661
87.0805
89.7569
92.5079
95.2452
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
20.8439
47.3136
65.6475
79.0481
86.8945
92.4503
95.5751
97.3052
98.1469
98.8549
N/A
N/A
20.8439
26.4697
18.3340
13.4005
7.8465
5.5558
3.1247
1.7302
0.8417
0.7080
0.7080
0.4371
69.0004
46.2421
30.3760
18.5522
11.6798
6.7172
3.9359
2.4103
1.7009
1.0826
0.4233
0.0000
79.1561
52.6864
34.3525
20.9519
13.1055
7.5497
4.4249
2.6948
1.8531
1.1451
0.4371
0.0000
87.1701
87.7685
88.4244
88.5467
89.1220
88.9736
88.9483
89.4420
91.7885
94.5428
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
22.3366
50.6941
66.1886
74.4228
79.5663
83.7227
86.1316
88.4452
88.9625
89.9266
N/A
N/A
N/A
N/A
N/A
N/A
22.3366
28.3575
15.4945
8.2342
5.1434
4.1564
2.4089
2.3136
0.5173
0.9641
0.9641
0.9641
0.9641
0.9641
0.9641
5.2530
64.2484
39.2256
25.8264
19.0359
14.9867
11.6883
9.9758
8.2482
8.2608
7.8130
7.3355
6.8263
6.2833
5.7044
5.0871
0.0000
77.6634
49.3059
33.8114
25.5772
20.4337
16.2773
13.8684
11.5548
11.0375
10.0734
9.1093
8.1453
7.1812
6.2171
5.2530
0.0000
82.7268
79.5557
76.3837
74.4253
73.3432
71.8077
71.9321
71.3830
74.8434
77.5606
80.5270
83.8070
87.4975
91.7536
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
33.4193
59.1296
67.4080
33.4193
25.7103
8.2784
56.7613
33.9757
27.6799
66.5807
40.8704
32.5920
85.2519
83.1303
84.9284
Continued on next page
Commercial Auto/Truck Liability/Medical
Workers’ Compensation
Commercial Multiple Peril
8
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
75.7571
83.8673
89.5799
93.4124
95.6455
96.9571
97.4497
N/A
N/A
N/A
N/A
N/A
N/A
8.3491
8.1102
5.7126
3.8325
2.2331
1.3116
0.4926
0.4926
0.4926
0.4926
0.4926
0.4926
0.0873
20.8936
13.9041
8.9270
5.5614
3.6242
2.5101
2.1678
1.8029
1.4137
0.9988
0.5563
0.0845
0.0000
24.2429
16.1327
10.4201
6.5876
4.3545
3.0429
2.5503
2.0577
1.5651
1.0725
0.5799
0.0873
0.0000
86.1844
86.1858
85.6710
84.4217
83.2276
82.4887
85.0017
87.6150
90.3275
93.1260
95.9349
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
3.7026
11.5535
21.9296
32.8555
46.6164
60.9092
69.2349
71.6574
73.7610
77.8395
N/A
N/A
N/A
N/A
N/A
N/A
3.7026
7.8510
10.3761
10.9259
13.7609
14.2928
8.3257
2.4225
2.1036
4.0786
4.0786
4.0786
4.0786
4.0786
4.0786
1.7676
69.6231
66.1321
59.8022
52.4848
41.7548
29.7641
23.1402
22.1728
21.4707
18.6826
15.7097
12.5396
9.1594
5.5551
1.7118
0.0000
96.2974
88.4465
78.0704
67.1445
53.3836
39.0908
30.7651
28.3426
26.2390
22.1605
18.0819
14.0033
9.9248
5.8462
1.7676
0.0000
72.3001
74.7708
76.6003
78.1669
78.2165
76.1409
75.2157
78.2316
81.8275
84.3062
86.8808
89.5476
92.2886
95.0206
96.8412
N/A
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
68.7769
31.7753
19.7142
14.5834
10.5972
6.7507
5.9485
4.1099
2.2005
2.0080
1.8155
1.6230
1.4304
1.2379
1.0454
0.0000
88.9290
85.0004
82.9115
83.1827
83.2194
80.4607
83.4397
82.5788
74.8580
77.5737
80.5381
83.8157
87.5033
91.7563
96.8412
N/A
Medical Malpractice
Special Liability (Ocean Marine, Aircraft (all Perils), Boiler and Machinery)
Discounted
Cumulative
Estimated Losses
Unpaid Losses at
Losses Paid
Paid Each Year
Year End
Tax Year
(%)
(%)
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
31.2231
68.2247
80.2858
85.4166
89.4028
93.2493
94.0515
95.8901
97.7995
97.9920
N/A
N/A
N/A
N/A
N/A
N/A
31.2231
37.0016
12.0611
5.1308
3.9862
3.8465
0.8022
1.8386
1.9093
0.1925
0.1925
0.1925
0.1925
0.1925
0.1925
1.0454
61.1626
27.0091
16.3453
12.1308
8.8189
5.4316
4.9634
3.3939
1.6473
1.5577
1.4621
1.3603
1.2517
1.1359
1.0124
0.0000
9
Other Liability
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
9.9737
21.8819
32.5583
41.4543
56.3583
71.6763
78.0397
82.2566
85.2754
87.4014
N/A
N/A
N/A
N/A
N/A
N/A
9.9737
11.9082
10.6764
8.8960
14.9040
15.3180
6.3635
4.2168
3.0188
2.1260
2.1260
2.1260
2.1260
2.1260
2.1260
1.9688
68.4086
60.6475
53.6438
48.0142
35.8074
22.3638
17.2755
14.0665
11.8818
10.4742
8.9734
7.3730
5.6665
3.8469
1.9066
0.0000
90.0263
78.1181
67.4417
58.5457
43.6417
28.3237
21.9603
17.7434
14.7246
12.5986
10.4727
8.3467
6.2207
4.0948
1.9688
0.0000
75.9874
77.6356
79.5409
82.0115
82.0485
78.9578
78.6670
79.2771
80.6934
83.1378
85.6836
88.3341
91.0905
93.9461
96.8412
N/A
Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Glass, Burglary, and Theft)
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
57.7817
88.3390
N/A
N/A
57.7817
30.5573
5.8305
5.8305
39.8533
10.9415
5.6463
0.0000
42.2183
11.6610
5.8305
0.0000
94.3982
93.8306
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
84.1827
98.8697
N/A
N/A
84.1827
14.6870
0.5651
0.5651
15.2177
1.0606
0.5473
0.0000
15.8173
1.1303
0.5651
0.0000
96.2092
93.8306
96.8412
N/A
Auto Physical Damage
Fidelity, Surety, Financial Guaranty, Mortgage Guaranty
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
25.1728
57.6281
N/A
N/A
25.1728
32.4553
21.1859
21.1859
68.7158
39.7578
20.5167
0.0000
74.8272
42.3719
21.1859
0.0000
91.8327
93.8306
96.8412
N/A
Other (including Credit, Accident and Health)
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
63.6725
88.8927
N/A
N/A
63.6725
25.2202
5.5536
5.5536
34.1976
10.4220
5.3782
0.0000
36.3275
11.1073
5.5536
0.0000
94.1369
93.8306
96.8412
N/A
10
International (Composite)
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
30.8006
56.9235
68.6906
76.7697
83.5336
88.9725
91.6218
93.4305
94.3638
95.0595
N/A
N/A
N/A
N/A
N/A
N/A
30.8006
26.1229
11.7671
8.0791
6.7639
5.4390
2.6493
1.8087
0.9333
0.6957
0.6957
0.6957
0.6957
0.6957
0.6957
1.4622
58.6213
35.5330
25.7379
19.1017
13.3837
8.6546
6.4927
5.0554
4.4269
4.0020
3.5490
3.0659
2.5509
2.0016
1.4160
0.0000
69.1994
43.0765
31.3094
23.2303
16.4664
11.0275
8.3782
6.5695
5.6362
4.9405
4.2448
3.5492
2.8535
2.1578
1.4622
0.0000
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
35.8044
72.2671
79.1294
N/A
N/A
35.8044
36.4628
6.8622
10.4353
10.4353
58.7668
25.0109
19.5830
10.1057
0.0000
64.1956
27.7329
20.8706
10.4353
0.0000
91.5432
90.1850
93.8306
96.8412
N/A
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
30.8006
56.9235
68.6906
76.7697
83.5336
88.9725
91.6218
93.4305
94.3638
95.0595
N/A
N/A
N/A
N/A
N/A
N/A
30.8006
26.1229
11.7671
8.0791
6.7639
5.4390
2.6493
1.8087
0.9333
0.6957
0.6957
0.6957
0.6957
0.6957
0.6957
1.4622
58.6213
35.5330
25.7379
19.1017
13.3837
8.6546
6.4927
5.0554
4.4269
4.0020
3.5490
3.0659
2.5509
2.0016
1.4160
0.0000
69.1994
43.0765
31.3094
23.2303
16.4664
11.0275
8.3782
6.5695
5.6362
4.9405
4.2448
3.5492
2.8535
2.1578
1.4622
0.0000
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
23.0513
47.1565
23.0513
24.1051
69.1110
48.8016
76.9487
52.8435
89.8144
92.3512
Continued on next page
Tax Year
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
Reinsurance A
Reinsurance B (Composite)
Tax Year
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
Reinsurance C
11
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 2
AY+ 3
AY+ 4
73.1742
N/A
N/A
26.0177
13.4129
13.4129
25.1708
12.9892
0.0000
26.8258
13.4129
0.0000
93.8306
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
73.9503
93.7601
N/A
N/A
73.9503
19.8099
3.1199
3.1199
24.6750
5.8549
3.0214
0.0000
26.0497
6.2399
3.1199
0.0000
94.7226
93.8306
96.8412
N/A
Tax Year
Cumulative
Losses Paid
(%)
Estimated Losses
Paid Each Year
(%)
Discounted
Unpaid Losses at
Year End
(%)
Unpaid Losses
at Year End
(%)
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
AY+15
30.8006
56.9235
68.6906
76.7697
83.5336
88.9725
91.6218
93.4305
94.3638
95.0595
N/A
N/A
N/A
N/A
N/A
N/A
30.8006
26.1229
11.7671
8.0791
6.7639
5.4390
2.6493
1.8087
0.9333
0.6957
0.6957
0.6957
0.6957
0.6957
0.6957
1.4622
58.6213
35.5330
25.7379
19.1017
13.3837
8.6546
6.4927
5.0554
4.4269
4.0020
3.5490
3.0659
2.5509
2.0016
1.4160
0.0000
69.1994
43.0765
31.3094
23.2303
16.4664
11.0275
8.3782
6.5695
5.6362
4.9405
4.2448
3.5492
2.8535
2.1578
1.4622
0.0000
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
N/A
Miscellaneous Casualty (Composite)
Long Lines (Composite)
DRAFTING INFORMATION
The principal author of this revenue
procedure is Katherine A. Hossofsky of
the Office of the Assistant Chief Counsel (Financial Institutions and Products).
For further information regarding this
revenue procedure, contact Ms. Hossofsky on (202) 622–3477 (not a tollfree number).
26 CFR 601.201: Rulings and determination letters
(Also Part I, Sections 832, 846; 1.832–4, 1.846–
1.)
Rev. Proc. 96–45
SECTION 1. PURPOSE
This revenue procedure prescribes the
salvage discount factors for the 1996
accident year. These factors will be used
for computing discounted estimated salvage recoverable under § 832 of the
Internal Revenue Code.
SEC. 2. BACKGROUND
Section 832(b)(5)(A) requires that all
estimated salvage recoverable (including
that which cannot be treated as an asset
for state accounting purposes) be taken
into account in computing the deduction
for losses incurred. Under § 832(b)(5)(A), paid losses are to be reduced by
salvage and reinsurance recovered during the taxable year. This amount is
adjusted to reflect changes in discounted
unpaid losses on nonlife insurance contracts and in unpaid losses on life
insurance contracts. An adjustment is
then made to reflect any changes in
discounted estimated salvage recoverable and in reinsurance recoverable.
12
Pursuant to § 832(b), the amount of
estimated salvage is determined on a
discounted basis in accordance with procedures established by the Secretary.
SEC. 3. SCOPE
This revenue procedure applies to any
taxpayer that is required to discount
estimated salvage recoverable under
§ 832.
SEC. 4. APPLICATION
.01 The following tables present
separately for each line of business the
discount factors under § 832 for the
1995 accident year. All the discount
factors presented in this section were
determined using the applicable interest
rate under § 846(c) for 1996, which is
6.63 percent, and by assuming all estimated salvage is recovered in the
middle of each calendar year. See Rev.
Proc. 91–48, 1991–2 C.B. 760, for background regarding the tables.
.02 These tables must be used by
taxpayers irrespective of whether they
elected to discount unpaid losses using
their own historical experience under
§ 846.
.03 Tables.
Tables of Discount Factors
Salvage Recoverable
- 1996 Interest rate: 6.63 percent
Homeowners/Farmowners
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
92.4763
87.0955
88.2656
89.1817
89.7376
88.9620
89.6468
89.0559
89.1020
91.8346
94.5850
96.8412
Private Passenger Auto Liability/Medical
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
90.2868
89.7336
89.6646
89.1303
88.1776
86.8495
85.2614
85.7661
87.0805
89.7569
92.5079
95.2452
96.8412
Commercial Auto/Truck Liability/
Medical
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
87.1701
87.7685
88.4244
88.5467
89.1220
88.9736
88.9483
Tax Year
Discount
Factor
(%)
AY+ 7
AY+ 8
AY+ 9
AY+10
89.4420
91.7885
94.5428
96.8412
Workers’ Compensation
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
82.7268
79.5557
76.3837
74.4253
73.3432
71.8077
71.9321
71.3830
74.8434
77.5606
80.5270
83.8070
87.4975
91.7536
96.8412
Commercial Multiple Peril
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
85.2519
83.1303
84.9284
86.1844
86.1858
85.6710
84.4217
83.2276
82.4887
85.0017
87.6150
90.3275
93.1260
95.9349
96.8412
Medical Malpractice
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
72.3001
74.7708
76.6003
78.1669
78.2165
76.1409
75.2157
78.2316
81.8275
13
Tax Year
Discount
Factor
(%)
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
84.3062
86.8808
89.5476
92.2886
95.0206
96.8412
Special Liability (Ocean Marine,
Aircraft (all Perils), Boiler and
Machinery)
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
88.9290
85.0004
82.9115
83.1827
83.2194
80.4607
83.4397
82.5788
74.8580
77.5737
80.5381
83.8157
87.5033
91.7563
96.8412
Other Liability
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
75.9874
77.6356
79.5409
82.0115
82.0485
78.9578
78.6670
79.2771
80.6934
83.1378
85.6836
88.3341
91.0905
93.9461
96.8412
Special Property (Fire, Allied Lines,
Inland Marine, Earthquake, Glass,
Burglary, and Theft)
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
89.4016
91.1418
92.1391
Continued on next page
Tax Year
Discount
Factor
(%)
AY+ 3
AY+ 4
AY+ 5
AY+ 6
93.5634
94.5558
96.2074
96.8412
Auto Physical Damage
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
95.1966
95.6676
96.8412
Fidelity, Surety, Financial Guaranty,
Mortgage Guaranty
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
84.0469
86.4207
87.7821
89.4142
91.0835
92.7170
93.9699
95.0086
96.8412
Other (including Credit, Accident and
Health)
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
89.9648
91.7311
92.9067
94.5018
95.8377
96.8412
International (Composite)
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
Tax Year
Discount
Factor
(%)
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
Reinsurance A
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
77.0244
80.3308
82.0405
83.8941
86.0620
88.4270
91.0715
93.8805
96.8412
Reinsurance B (Composite)
Discount
Factor
Tax Year
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
Reinsurance C
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
77.0244
80.3308
82.0405
83.8941
14
Tax Year
Discount
Factor
(%)
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
86.0620
88.4270
91.0715
93.8805
96.8412
Miscellaneous Casualty (Composite)
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
85.0124
86.9026
87.8050
89.0382
90.2502
91.6718
92.9603
94.5573
96.8412
Long Lines (Composite)
Tax Year
Discount
Factor
(%)
AY+ 0
AY+ 1
AY+ 2
AY+ 3
AY+ 4
AY+ 5
AY+ 6
AY+ 7
AY+ 8
AY+ 9
AY+10
AY+11
AY+12
AY+13
AY+14
84.7137
82.4881
82.2050
82.2275
81.2783
78.4822
77.4953
76.9538
78.5443
81.0046
83.6078
86.3851
89.3943
92.7611
96.8412
DRAFTING INFORMATION
The principal author of this revenue
procedure is Katherine A. Hossofsky of
the Office of the Assistant Chief Counsel (Financial Institutions and Products).
For further information regarding this
revenue procedure, contact Ms. Hossofsky on (202) 622–3477 (not a tollfree number).
Part IV. Items of General Interest
Effective Date Extension for Certain
Payors Revising Their Substitute
Forms W–9
FOR FURTHER INFORMATION CONTACT: Lisa Sams (202) 622–3840, (not
a toll-free number).
Announcement 96–77
SUPPLEMENTARY
INFORMATION:
This announcement extends the January 1, 1997, effective date of certain
provisions of Rev. Proc. 96–26, 1996–8
I.R.B. 22, for certain payors. That revenue procedure provides requirements
for payors of interest, dividends, and
patronage dividends, and brokers that
want to design and provide their own
substitute Form W–9, Request for Taxpayer Identification Number and Certification, to obtain the required taxpayer
identification number and ‘‘no backup
withholding’’ certifications from their
payees.
The effective date of Rev. Proc.
96–26 (other than for section 5 relating
to certain impermissible uses of the
required certifications) is extended to
July 1, 1997, if a payor (1) is required
to obtain the approval of a governmental
authority for changes to the format of its
substitute Form W–9 required by Rev.
Proc. 96–26, (2) applies, on or before
September 30, 1996, for that approval,
and (3) thereafter actively pursues that
approval.
The principal author of this announcement is John Coulter of the Office of
Assistant Chief Counsel (Income Tax
and Accounting). For further information
regarding this announcement contact Mr.
Coulter at (202) 622–4910 (not a tollfree call).
Revision of Section 482 Cost
Sharing Regulations; Correction
Announcement 96–78
AGENCY: Internal Revenue Service,
Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document contains
corrections to final regulations (TD
8670 [1996–24 I.R.B. 6]), which were
published in the Federal Register on
Monday, May 13, 1996 (61 FR 21955)
relating to qualified cost sharing arrangements.
EFFECTIVE DATE: May 13, 1996.
published in the Federal Register on
Wednesday, May 29, 1996 (61 FR
26788). The final regulations relate to
requirements for furnishing a taxpayer
identifying number on returns, statements or other documents.
Background
EFFECTIVE DATE: May 29, 1996.
The final regulations that are the
subject of these corrections are under
section 482 of the Internal Revenue
Code.
FOR FURTHER INFORMATION CONTACT: Lilo A. Hester, (202) 874–1490
(not a toll-free number).
Need for Correction
SUPPLEMENTARY
INFORMATION:
As published, the final regulations
contain errors which may prove to be
misleading and are in need of clarification.
Correction of Publication
Accordingly, the publication of the
final regulations (TD 8670), which are
the subject of FR Doc. 96–11781, is
corrected as follows:
Background
The final regulations that are the
subject of these corrections are under
section 6109 of the Internal Revenue
Code.
Need for Correction
As published, TD 8671 contains errors that are in need of correction.
§ 1.482–7 [Corrected]
On page 21956, column 2, instructional ‘‘Par. 3.’’, is corrected by revising
item g. to read as follows: g. By
redesignating the introductory text of
paragraph (j)(2) following the heading
and paragraphs (j)(2)(i) through (j)(2)(v)
as the introductory text of paragraph
(j)(2)(i) and paragraphs (j)(2)(i)(A)
through (j)(2)(i)(E), respectively; and,
by adding a heading to newly designated paragraph (j)(2)(i).
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on
June 27, 1996, 8:45 a.m., and published in the
issue of the Federal Register for June 28, 1996, 61
F.R. 33656)
Taxpayer Identifying Numbers
(TINs); Correction
Announcement 96–79
AGENCY: Internal Revenue Service,
Treasury.
ACTION: Correction to final regulations.
SUMMARY: This document contains
corrections to final regulations (TD
8671 [1996–26 I.R.B. 8]) which were
15
Correction of Publication
Accordingly, the publication of final
regulations which are the subject of FR
Doc. 96–13397 is corrected as follows:
1. On page 26790, column 1, in
amendatory instruction ‘‘Par 2.’’, line 1,
the language ‘‘Section § 301.6109–1 is’’
is corrected to read ‘‘Section
301.6109–1 is’’.
§ 301.6109–1 [Corrected]
2. On page 26791, columns 1 and 2,
§ 301.6109–1(d)(3)(iv)(A)(1) is corrected to read as follows:
§ 301.6109–1 Identifying numbers.
*
*
*
*
*
(d) * * *
(3) * * *
(iv) * * *
(A) * * *
(1) Procedures for providing Form
SS–4 and Form W–7, or such other
necessary form to applicants for obtaining a taxpayer identifying number;
*
*
*
*
*
3. On page 26792, column 2,
§ 301.6109–1(h)(1), line 8, the language
‘‘identification numbers apply after
1996–35
I.R.B.
May’’ is corrected to read ‘‘identification numbers apply on and after May’’.
Cynthia E. Grigsby,
Chief, Regulations Unit,
Assistant Chief Counsel (Corporate).
(Filed by the Office of the Federal Register on
June 27, 1996, 8:45 a.m., and published in the
issue of the Federal Register for June 28, 1996, 61
F.R. 33657)
Foundations Status of Certain
Organizations
Announcement 96–80
The following organizations have
failed to establish or have been unable
to maintain their status as public charities or as operating foundations. Accordingly, grantors and contributors may not,
after this date, rely on previous rulings
or designations in the Cumulative List
of Organizations (Publication 78), or on
the presumption arising from the filing
of notices under section 508(b) of the
Code. This listing does not indicate that
the organizations have lost their status
as organizations described in section
501(c)(3), eligible to receive deductible
contributions.
Former Public Charities. The following organizations (which have been
treated as organizations that are not
private foundations described in section
509(a) of the Code) are now classified
as private foundations:
AFTL Ambassadors for the Lord
Ministries, Garland, TX
American Laryngeal Papilloma
Foundation, Lake Hiawatha, NJ
American Values, Washington, DC
Apostolic Christian Village Inc.,
Francesville, IN
Applewick Sports Fitness Club, East
Chicago, IN
Aspens Celebration of Indigenous
Cultures, Aspen, CO
Balloon Project, Inc., Port Chester, NY
Beatrice K. Compten Memorial Trust,
Beaver Falls, PA
Bicycle Service Racing Team, Wichita,
KS
Bogota Resque Squad, Bogota, NJ
Books for Democracy Incorporated,
Alexandria, VA
Breakthrough Breast Cancer, Bloomfield
Hills, MI
Breast Cancer Resource Committee Inc.,
Washington, DC
1996–35
I.R.B.
Center for Family Resources Inc.,
Metuchen, NJ
Center for Industrial Preservation Inc.,
Petersburg, VA
Center for Justice and International Law,
Washington, DC
Center for Language Development Inc.,
East Orange, NJ
Center for Public Information on
Electromagnetic Radiation Inc.,
Milltown, NJ
Central Roxborough Civic Assoc.,
Philadelphia, PA
Centre County Columbus Celebration,
State College, PA
Charitable Foundation of the Rotary
Club of Roanoke Valley Inc.,
Roanoke, VA
Charles County Dive Rescue Inc.,
Waldorf, MD
Chinese Academic Link USA Inc.,
Hyattsville, MD
Christe Inc., Cincinnati, OH
Citizens Information Inc., Chester, NJ
College Bound Inc., Washington, DC
College of Exploration, Vienna, VA
Committee of 100 Dorchester Inc.,
Cambridge, MD
Common Concerns Broadcasting Inc.,
Trenton, NJ
Community Council for the Homeless,
Washington, DC
Concerned African American Parents of
Westfield, Westfield, NJ
Conservative Christian Action Group
Inc., Elkhart, WI
Corrigan Ministries, Inc., Cincinnati,
OH
Creative Playgrounds of Nutley a New
Jersey Non-Profit Corporation,
Nutley, NJ
Cumberland-Goodwill Fire & Rescue,
Carlisle, PA
Cure (Citizens Urge Rescue of the
Environment), Hanover, PA
Curwensville Development Corp.,
Curwensville, PA
Daffodil West Hermitage, Cimarron,
NM
Dallas Contemporary Art Museum,
Dallas, TX
Damocles Inc., Arlington, VA
Dancers Unlimited Performing
Ensemble, Wilmington, DE
Dawson Bucs Little League Teams,
Rawlings, MD
Debate America, Washington, DC
Delaware Valley Alliance for RIF,
Norristown, PA
16
Desert Shield-Storm Family Foundation
Inc., Wall, NJ
De Unique Incorporated, Cheverly, MD
Elizabeth Williams Group Home, Akron,
OH
Environmental Awareness Group, Inc.,
Boston, MA
Holiday House II, Philadelphia, PA
Indian Head Literacy Coalition, New
Richmond, WI
International Human Rights Consulting
Group, Washington, DC
Lommen Nelson Cole & Stageberg
Foundation, Minneapolis, MN
Manchester Supportive Housing Inc.,
Oakmont, PA
Mathieu Mategot Foundation for
Contemporary Tapestry Inc.,
Bethesda, MD
Medical Foundation of Cincinnati,
Cincinnati, OH
Paul Morgan Academy, Fort Worth, TX
Networking for Jesus, Houston, TX
Northeast Scattered Site Resident
Management Corp., Chicago, IL
Northwest Perry Township
Revitalization Group, Lima, OH
Out of Bondage Ministries, Inc., La
Salle, CO
Prime Life Foundation, Reston, VA
Recreational Boating Industries
Educational Foundation, Romeo, MI
Remote Sensing Research Incorporated,
Fort Collins, CO
Reverend Charles Brink Scholarship
Trust, Inc., Kansas City, KS
Shelter Company, Lebanon, VA
Tri-County Recreational Center Inc.,
Chestertown, NY
Virginia Beach Lifeguard Association
Inc., Virginia Beach, VA
Wings to Needs Incorporated, LaGrange,
KY
If an organization listed above submits information that warrants the renewal of its classification as a public
charity or as a private operating foundation, the Internal Revenue Service will
issue a ruling or determination letter
with the revised classification as to
foundation status. Grantors and contributors may thereafter rely upon such ruling or determination letter as provided
in section 1.509(a)–7 of the Income Tax
Regulations. It is not the practice of the
Service to announce such revised classification of foundation status in the Internal Revenue Bulletin.
Numerical Finding List1
Bulletins 1996–27 through 1996–34
Announcements:
96–61, 1996–27 I.R.B. 72
96–62, 1996–28 I.R.B. 55
96–63, 1996–29 I.R.B. 18
96–64, 1996–29 I.R.B. 18
96–65, 1996–29 I.R.B. 18
96–66, 1996–29 I.R.B. 19
96–67, 1996–30 I.R.B. 27
96–68, 1996–31 I.R.B. 45
96–69, 1996–32 I.R.B. 38
96–70, 1996–32 I.R.B. 40
96–71, 1996–33 I.R.B. 16
96–72, 1996–33 I.R.B. 16
96–73, 1996–33 I.R.B. 18
96–74, 1996–33 I.R.B. 19
96–75, 1996–34 I.R.B. 29
96–76, 1996–34 I.R.B. 29
Tax Conventions:
1996–28 I.R.B. 36
Treasury Decisions:
8673, 1996–27 I.R.B. 4
8674, 1996–28 I.R.B. 7
8675, 1996–29 I.R.B. 5
8676, 1996–30 I.R.B. 4
8677, 1996–30 I.R.B. 7
8678, 1996–31 I.R.B. 11
8679, 1996–31 I.R.B. 4
8680, 1996–33 I.R.B. 5
Court Decisions:
2058, 1996–34 I.R.B. 13
2059, 1996–34 I.R.B. 10
2060, 1996–34 I.R.B. 5
Notices:
96–36, 1996–27 I.R.B. 11
96–37, 1996–31 I.R.B. 29
96–38, 1996–31 I.R.B. 29
96–39, 1996–32 I.R.B. 8
96–40, 1996–33 I.R.B. 11
Proposed Regulations:
CO–9–96, 1996–34 I.R.B. 20
CO–24–96, 1996–30 I.R.B. 22
CO–25–96, 1996–31 I.R.B. 30
CO–26–96, 1996–31 I.R.B. 31
FI–28–96, 1996–31, I.R.B. 33
FI–32–95, 1996–34 I.R.B. 21
FI–48–95, 1996–31 I.R.B. 36
FI–59–94, 1996–30 I.R.B. 23
GL–7–96, 1996–33 I.R.B. 13
IA–26–94, 1996–30 I.R.B. 24
IA–29–96, 1996–33 I.R.B. 14
IA-292-84, 1996–28 I.R.B. 38
PS–22–96, 1996–33 I.R.B. 15
PS–39–93, 1996–34 I.R.B. 27
Public Laws:
104–117, 1996–34 I.R.B. 19
Railroad Retirement Quarterly Rate
1996–29 I.R.B. 14
Revenue Procedures:
96–36, 1996–27 I.R.B. 11
96–37, 1996–29 I.R.B. 16
96–39, 1996–33 I.R.B. 11
96–40, 1996–32 I.R.B. 8
96–41, 1996–32 I.R.B. 9
96–42, 1996–32 I.R.B. 14
Revenue Rulings:
96–33, 1996–27 I.R.B. 4
96–34, 1996–28 I.R.B. 4
96–35, 1996–31 I.R.B. 4
96–36, 1996–30 I.R.B. 6
96–37, 1996–32 I.R.B. 4
96–38, 1996–33 I.R.B. 4
96–39, 1996–34 I.R.B. 4
1
A cumulative list of all Revenue Rulings, Revenue Procedures, Treasury Decisions, etc., published in Internal Revenue Bulletins 1996–1
through 1996–26 will be found in Internal Revenue Bulletin 1996–27, dated July 1, 1996.
17
Finding List of Current Action on
Previously Published Items1
Bulletins 1996–27 through 1996–34
*Denotes entry since last publication
Revenue Procedures:
80–27
Modified by
96–40, 1996–32 I.R.B. 8
87–32
Modified by
TD 8680, 1996–33 I.R.B. 5
92–20
Modified by
TD 8680, 1996–33 I.R.B. 5
95–29
Superseded by
96–36, 1996–27 I.R.B. 11
95–29A
Superseded by
96–36, 1996–27 I.R.B. 11
95–30
Superseded by
96–42, 1996–32 I.R.B. 14
1
A cumulative finding list for previously published
items mentioned in Internal Revenue Bulletins
1996–1 through 1996–26 will be found in Internal
Revenue Bulletin 1996–27, dated July 1, 1996.
18
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.