26 CFR 601.201: Rulings and determination letters. (Also: Part I, Sections 832, 846; 1.832-4, 1.846-1.)

FederalIRS revenue procedures

Ask Donna

How this section applies to your facts.

Internal Revenue Bulletin › IRB 2019 › Revenue Procedure › Rev. Proc. 2019-6

This text was captured on Aug 14, 2026. It is a snapshot, not a live feed, so check the official code before relying on it.

Text

26 CFR 601.201: Rulings and determination letters.

(Also: Part I, Sections 832, 846; 1.832-4, 1.846-1.)

Rev. Proc. 2019-06

SECTION 1. PURPOSE

This revenue procedure prescribes unpaid loss discount factors for the 2018

accident year for use in computing discounted unpaid losses under § 846 of the Internal

Revenue Code. The unpaid loss discount factors also serve as salvage discount

factors for the 2018 accident year for use in computing discounted estimated salvage

recoverable under § 832. The discount factors prescribed herein were determined

under § 846, as amended by section 13523 of the Tax Cuts and Jobs Act, Pub. L. No.

115-97 (December 22, 2017) (“TCJA”), and proposed regulations under § 846 (REG-

103163-18) published in the Federal Register (83 FR 55646) on November 7, 2018 (the

“proposed regulations”). If necessary after the proposed regulations are published as

final regulations, the Department of the Treasury (the “Treasury Department”) and

Internal Revenue Service (“IRS”) intend to publish for each property and casualty line of

business revised unpaid loss discount factors for the 2018 accident year for use in

taxable years ending on or after the date the final regulations are published.

SECTION 2. BACKGROUND

.01 Modification of Discounting Rules

(1) Section 13523 of the TCJA amended § 846 for taxable years beginning after

December 31, 2017. Section 13523(a) and (b) of the TCJA amended the definition of

annual rate under § 846(c) and the computational rules for loss payment patterns under

§ 846(d), respectively. Section 13523(c) of the TCJA repealed the election that was

previously set forth in § 846(e) to use the taxpayer’s own historical loss payment pattern

instead of the pattern published by the Secretary.

ember 31, 2017. Section 13523(a) and (b) of the TCJA amended the definition of

annual rate under § 846(c) and the computational rules for loss payment patterns under

§ 846(d), respectively. Section 13523(c) of the TCJA repealed the election that was

previously set forth in § 846(e) to use the taxpayer’s own historical loss payment pattern

instead of the pattern published by the Secretary.

(2) Section 13523(e) of the TCJA provides the transitional rule for the application

of the amendments in the first taxable year beginning after December 31, 2017, and for

subsequent taxable years (the “TCJA transition rule”). Specifically, section 13523(e)

provides that, for the first taxable year beginning after December 31, 2017, the unpaid

losses and expenses unpaid (as defined in § 832(b)(5) and (6)) at the end of the

preceding taxable year, and the unpaid losses (as defined in §§ 805(a)(1) and

807(c)(2)) at the end of the preceding taxable year, are determined as if the

amendments made by section 13523 of the TCJA had applied to the unpaid losses and

expenses unpaid in the preceding taxable year and by using the interest rate and loss

payment patterns applicable to accident years ending with calendar year 2018. The

resulting adjustment (the “TCJA adjustment”), if any, is included in the taxpayer’s gross

income ratably over an eight year period (the “TCJA period of adjustment,” which is the

first taxable year beginning after December 31, 2017, and the seven succeeding taxable

years). Section 13523(e) also provides that, for subsequent taxable years, the

amendments made by section 13523 are applied with respect to unpaid losses and

expenses unpaid for accident years ending with or before calendar year 2018 by using

the interest rate and loss payment patterns applicable to accident years ending with

calendar year 2018. Loss payment patterns for the 2017 determination year were

previously prescribed in Rev. Proc. 2018-13, 2018-7 I.R.B. 356. In Rev. Proc

section 13523 are applied with respect to unpaid losses and

expenses unpaid for accident years ending with or before calendar year 2018 by using

the interest rate and loss payment patterns applicable to accident years ending with

calendar year 2018. Loss payment patterns for the 2017 determination year were

previously prescribed in Rev. Proc. 2018-13, 2018-7 I.R.B. 356. In Rev. Proc. 2018-13,

the Treasury Department and IRS also announced the intention to publish revised loss

payment patterns for the 2017 determination year in accordance with the TCJA

transition rule.

.02 Proposed Regulations

(1) Section 1.846-1(c) of the proposed regulations provides that the annual rate

for any calendar year is the average of the monthly spot interest rates on corporate

bonds with times to maturity of not more than seventeen and one-half years based on a

yield curve that reflects the average, for the most recent 60-month period ending before

the beginning of the calendar year, of monthly yields on corporate bonds described in

§ 430(h)(2)(D)(i).

(2) Section 1.846-1(d)(1) of the proposed regulations provides that, in general,

the loss payment pattern determined by the Secretary for each line of business is

determined by reference to the historical loss payment pattern applicable to such line of

business determined in accordance with the method of determination set forth in

§ 846(d)(2) and the computational rules prescribed in § 846(d)(3) on the basis of data

from annual statements described in § 846(d)(2)(A) and (B). However, under § 1.846-

1(d)(2) of the proposed regulations, the Secretary may adjust the loss payment pattern

for any line of business using a methodology described by the Secretary in other

published guidance if necessary to avoid negative payment amounts and otherwise

produce a stable pattern of positive discount factors less than one.

.03 Discount Factors for Accident Year 2018 and Prior Accident Years

of the proposed regulations, the Secretary may adjust the loss payment pattern

for any line of business using a methodology described by the Secretary in other

published guidance if necessary to avoid negative payment amounts and otherwise

produce a stable pattern of positive discount factors less than one.

.03 Discount Factors for Accident Year 2018 and Prior Accident Years

(1) The discount factors prescribed in this revenue procedure are determined by

using the applicable interest rate for accident year 2018 under § 846(c) and the

proposed regulations and revised loss payment patterns determined by the Secretary

for the 2017 determination year under § 846(d) and the proposed regulations.

(2) Pursuant to § 846(c) and the proposed regulations, the Secretary has

determined that the annual rate for the 2018 calendar year is 3.12 percent,

compounded semiannually. This annual rate is the average of the monthly spot rates

on corporate bonds with times to maturity of not more than seventeen and one-half

years based on a yield curve that reflects the average of monthly yields on corporate

bonds described in § 430(h)(2)(D)(i) for the period from January 2013 through

December 2017 (that is, the most recent 60-month period ending before the beginning

of the 2018 calendar year).1

(3) Pursuant to § 846(d) and the proposed regulations, the Secretary has

determined a revised loss payment pattern for each property and casualty line of

business for the 2017 determination year for use with respect to unpaid losses incurred

in accident year 2018 and prior accident years. The revised loss payment patterns for

the 2017 determination year are based, initially, on the aggregate loss payment

1 The published yield curve spot rates can be found at https://home.treasury.gov/data/treasury-coupon-

issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve

d losses incurred

in accident year 2018 and prior accident years. The revised loss payment patterns for

the 2017 determination year are based, initially, on the aggregate loss payment

1 The published yield curve spot rates can be found at https://home.treasury.gov/data/treasury-coupon-

issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve.

information reported on the 2015 annual statements of property and casualty insurance

companies and compiled by A.M. Best and Co. The lines of business for the 2017

determination year are the same as the lines of business for the 2012 determination

year. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645. Losses are reported on the annual

statement net of losses on reinsurance ceded, but include losses on assumed

proportional reinsurance. Losses with respect to assumed non-proportional reinsurance

are reported in three separate lines of business (for property, liability, and financial

reinsurance). The loss data include defense, cost containment, adjusting, and other

loss expenses, but are not reduced for salvage and subrogation receipts.

(4) Pursuant to § 1.846-1(d)(2) of the proposed regulations, the Secretary may

adjust the loss payment pattern for any line of business using a methodology described

by the Secretary in other published guidance if necessary to avoid negative payment

amounts and otherwise produce a stable pattern of positive discount factors less than

one. For the 2017 determination year, only one line of business requires adjustments

under the proposed regulations. That line of business is Other Liability – Claims Made.

The initial payment pattern results in negative payment amounts for the fifth, seventh,

and ninth years after the accident year. Therefore, the payment amounts for the fourth

through the ninth year after the accident year are adjusted following the steps listed in

the preamble to the proposed regulations. See 83 FR 55646.

SECTION 3

That line of business is Other Liability – Claims Made.

The initial payment pattern results in negative payment amounts for the fifth, seventh,

and ninth years after the accident year. Therefore, the payment amounts for the fourth

through the ninth year after the accident year are adjusted following the steps listed in

the preamble to the proposed regulations. See 83 FR 55646.

SECTION 3. SCOPE

This revenue procedure applies to any taxpayer that is required to discount

unpaid losses under § 846 for a line of business using the discount factors published by

the Secretary, and also applies to any taxpayer that is required to discount estimated

salvage recoverable under § 832. This revenue procedure applies to taxable years

beginning after December 31, 2017.

SECTION 4. TABLES OF DISCOUNT FACTORS

.01 The tables in this section 4 present separately for each line of business the

unpaid loss discount factors under § 846 for use in the first taxable year beginning after

December 31, 2017, and for use in calculating the TCJA adjustment. All of the discount

factors presented in these tables are determined by using the applicable interest rate for

2018 under § 846(c) and the proposed regulations, which is 3.12 percent, compounded

semiannually, and the revised payment patterns for the 2017 determination year

determined by the Secretary under § 846(d) and the proposed regulations. All of the

discount factors presented in these tables are determined by assuming all loss

payments occur in the middle of the calendar year.

.02 Tables 1 and 2 present separately for each line of business the unpaid loss

discount factors under § 846 for use in the first taxable year beginning after December

31, 2017

determined by the Secretary under § 846(d) and the proposed regulations. All of the

discount factors presented in these tables are determined by assuming all loss

payments occur in the middle of the calendar year.

.02 Tables 1 and 2 present separately for each line of business the unpaid loss

discount factors under § 846 for use in the first taxable year beginning after December

31, 2017. Any taxpayer using discount factors prescribed in Tables 1 and 2 to compute

discounted unpaid losses under § 846 for its first taxable year beginning after December

31, 2017, must use the discount factors prescribed in Tables 1 and 2 with respect to all

of its property and casualty lines of business and, consistent with the TCJA transition

rule, must use the discount factors prescribed in Tables 1 and 2 for all accident years

ending with or before calendar year 2018. The taxpayer also must use the discount

factors prescribed in Tables 1 and 2 as the salvage discount factors for the 2018

accident year and all prior accident years for purposes of determining estimated salvage

recoverable under § 832 with respect to all of its property and casualty lines of business

for its first taxable year beginning after December 31, 2017.

.03 Consistent with the TCJA transition rule, any taxpayer using the discount

factors prescribed in Tables 1 and 2 for its first taxable year beginning after December

31, 2017, must, for that taxable year, use the discount factors prescribed in Tables 3

and 4 for purposes of determining the unpaid losses and expenses unpaid (as defined

in § 832(b)(5) and (6)) at the end of the preceding taxable year, and the unpaid losses

(as defined in §§ 805(a)(1) and 807(c)(2)) at the end of the preceding taxable year

2 for its first taxable year beginning after December

31, 2017, must, for that taxable year, use the discount factors prescribed in Tables 3

and 4 for purposes of determining the unpaid losses and expenses unpaid (as defined

in § 832(b)(5) and (6)) at the end of the preceding taxable year, and the unpaid losses

(as defined in §§ 805(a)(1) and 807(c)(2)) at the end of the preceding taxable year. The

taxpayer also must, for its first taxable year beginning after December 31, 2017, use the

unpaid loss discount factors prescribed in Tables 3 and 4 to determine the amount of

the TCJA adjustment to be taken into account in that taxable year and, unless revised

discount factors have been published, the amount of the TCJA adjustment to be taken

into account in subsequent taxable years.

.04 Section V of Notice 88-100, 1988-2 C.B. 439, sets forth a composite method

for computing discounted unpaid losses for accident years that are not separately

reported on the annual statement. Tables 1 through 4 separately provide discount

factors for taxpayers who have elected to use the composite method of Notice 88-100.

See Rev. Proc. 2002-74, 2002-2 C.B. 980.

Table 1 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

Accident

Year

Auto

Physical

Damage

Fidelity/Surety

Financial

Guaranty/

Mortgage

Guaranty

International

Other*

2018

98.2924

95.7528

95.5027

96.0825

96.9295

2017

96.9631

Years before 2017

98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the

discount factor for taxable year 2018 is 98.4640 percent

ty/

Mortgage

Guaranty

International

Other*

2018

98.2924

95.7528

95.5027

96.0825

96.9295

2017

96.9631

Years before 2017

98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the

discount factor for taxable year 2018 is 98.4640 percent.

Table 1 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

Accident

Year

Reinsurance -

Nonproportional

Assumed

Financial Lines

Reinsurance -

Nonproportional

Assumed

Liability

Reinsurance -

Nonproportional

Assumed

Property

Special

Property

(Fire,

Allied

Lines,

Inland

Marine,

Earthquake,

Burglary &

Theft)

Warranty

Short-Tail

Composite

2018

95.3460

94.5342

96.0638

97.3657

98.0866

96.8171

2017

96.9631

Years before 2017

98.4640

Table 2 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the First Taxable Year Beginning After December 31, 2017

Long-Tail Lines of Business

Accident

Year

Commercial

Auto/Truck

Liability/Medical

Medical

Professional

Liability -

Claims-

Made

Medical

Professional

Liability -

Occurrence

Multiple

Peril

Lines

Other

Liability -

Claims-

Made

Other

Liability -

Occurrence

2018

93.7136

91.1847

86.1703

95.0382

90.3833

88.7841

2017

94.4581

92.2226

88.3371

93.3147

91.2289

89.6647

2016

95.0089

92.4524

89.9455

93.6251

91.7605

90.2415

2015

95.0495

92.7481

91.3552

92.8232

91.8038

90.4153

2014

94.9245

92.8961

92.3529

90.9251

91.6496

90.1639

2013

94.7625

92.9180

93.1329

91.1314

92.1818

90.2353

2012

95.0535

93.9081

93.9891

90.8234

92.6788

90.2570

2011

94.6859

94.8439

226

88.3371

93.3147

91.2289

89.6647

2016

95.0089

92.4524

89.9455

93.6251

91.7605

90.2415

2015

95.0495

92.7481

91.3552

92.8232

91.8038

90.4153

2014

94.9245

92.8961

92.3529

90.9251

91.6496

90.1639

2013

94.7625

92.9180

93.1329

91.1314

92.1818

90.2353

2012

95.0535

93.9081

93.9891

90.8234

92.6788

90.2570

2011

94.6859

94.8439

94.7064

90.5036

93.4801

91.5250

2010

96.1971

95.7805

95.8926

93.1447

94.6287

92.1970

2009

98.2598

97.6158

97.6580

94.5519

96.4911

94.1762

Taxpayer Not Using the Composite Method

2008

98.4640

95.9642

97.8837

95.6063

2007

98.4640

97.3555

98.4640

97.0517

Years before 2007

98.4640

Taxpayer Using the Composite Method

Years before 2009

98.4640

96.7357

97.9777

96.5363

Table 2 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the First Taxable Year Beginning After December 31, 2017

Long-Tail Lines of Business

Accident

Year

Private

Passenger

Auto

Liability/

Medical

Products

Liability -

Claims-Made

Products

Liability -

Occurrence

Workers'

Compensation

Long-Tail

Composite

2018

95.4241

85.1518

87.1543

87.4184

92.3564

2017

95.0203

85.6347

88.5453

85.8424

91.2748

2016

94.9784

87.5083

89.3276

84.6991

90.9788

2015

94.5984

82.9398

90.7045

83.1346

89.7633

2014

93.9009

84.2812

89.3185

82.5478

88.1393

2013

93.9524

85.6749

89.3669

81.9913

88.0168

2012

94.2025

87.1293

90.3357

82.3684

87.9945

2011

94.7658

88.4262

91.3398

83.2518

88.5587

2010

95.3902

89.7489

91.7494

83.8871

89.8408

2009

97.5924

91.0980

94.0873

85.8606

91.6956

Taxpayer Not Using the Composite Method

2008

98.4640

92.4736

95.5247

87.1320

93.0752

2007

98.4640

93.8753

96.9877

88.4289

94.4760

2006

98.4640

95.301

2012

94.2025

87.1293

90.3357

82.3684

87.9945

2011

94.7658

88.4262

91.3398

83.2518

88.5587

2010

95.3902

89.7489

91.7494

83.8871

89.8408

2009

97.5924

91.0980

94.0873

85.8606

91.6956

Taxpayer Not Using the Composite Method

2008

98.4640

92.4736

95.5247

87.1320

93.0752

2007

98.4640

93.8753

96.9877

88.4289

94.4760

2006

98.4640

95.3017

98.4640

89.7517

95.8902

2005

98.4640

96.7473

98.4640

91.1009

97.2894

2004

98.4640

98.1839

98.4640

92.4766

98.4640

2003

98.4640

93.8785

98.4640

2002

98.4640

95.3051

98.4640

2001

98.4640

96.7511

98.4640

2000

98.4640

98.1886

98.4640

Years before 2000

98.4640

Taxpayer Using the Composite Method

Years before 2009

98.464

94.4219

96.4942

90.7644

94.8105

Table 3 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

Accident

Year

Auto

Physical

Damage

Fidelity/Surety

Financial

Guaranty/

Mortgage

Guaranty

International

Other*

2017

98.2924

95.7528

95.5027

96.0825

96.9295

2016

96.9631

Years before 2016

98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the

discount factor for taxable year 2017 is 98.4640 percent

ty/

Mortgage

Guaranty

International

Other*

2017

98.2924

95.7528

95.5027

96.0825

96.9295

2016

96.9631

Years before 2016

98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the

discount factor for taxable year 2017 is 98.4640 percent.

Table 3 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017

Short-Tail Lines of Business

Accident

Year

Reinsurance -

Nonproportional

Assumed

Financial Lines

Reinsurance -

Nonproportional

Assumed

Liability

Reinsurance -

Nonproportional

Assumed

Property

Special

Property

(Fire,

Allied

Lines,

Inland

Marine,

Earthquake,

Burglary &

Theft)

Warranty

Short-Tail

Composite

2017

95.3460

94.5342

96.0638

97.3657

98.0866

96.8171

2016

96.9631

Years before 2016

98.4640

Table 4 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017

Long-Tail Lines of Business

Accident

Year

Commercial

Auto/Truck

Liability/Medical

Medical

Professional

Liability -

Claims-

Made

Medical

Professional

Liability -

Occurrence

Multiple

Peril

Lines

Other

Liability -

Claims-

Made

Other

Liability -

Occurrence

2017

93.7136

91.1847

86.1703

95.0382

90.3833

88.7841

2016

94.4581

92.2226

88.3371

93.3147

91.2289

89.6647

2015

95.0089

92.4524

89.9455

93.6251

91.7605

90.2415

2014

95.0495

92.7481

91.3552

92.8232

91.8038

90.4153

2013

94.9245

92.8961

92.3529

90.9251

91.6496

90.1639

2012

94.7625

92.9180

93.1329

91.1314

92.1818

90.2353

2011

95.0535

93.9081

93.9891

95.0382

90.3833

88.7841

2016

94.4581

92.2226

88.3371

93.3147

91.2289

89.6647

2015

95.0089

92.4524

89.9455

93.6251

91.7605

90.2415

2014

95.0495

92.7481

91.3552

92.8232

91.8038

90.4153

2013

94.9245

92.8961

92.3529

90.9251

91.6496

90.1639

2012

94.7625

92.9180

93.1329

91.1314

92.1818

90.2353

2011

95.0535

93.9081

93.9891

90.8234

92.6788

90.2570

2010

94.6859

94.8439

94.7064

90.5036

93.4801

91.5250

2009

96.1971

95.7805

95.8926

93.1447

94.6287

92.1970

2008

98.2598

97.6158

97.6580

94.5519

96.4911

94.1762

Taxpayer Not Using the Composite Method

2007

98.4640

95.9642

97.8837

95.6063

2006

98.4640

97.3555

98.4640

97.0517

Years before 2006

98.4640

Taxpayer Using the Composite Method

Years before 2008

98.4640

96.7357

97.9777

96.5363

Table 4 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017

Long-Tail Lines of Business

Accident

Year

Private

Passenger

Auto

Liability/

Medical

Products

Liability -

Claims-Made

Products

Liability -

Occurrence

Workers'

Compensation

Long-Tail

Composite

2017

95.4241

85.1518

87.1543

87.4184

92.3564

2016

95.0203

85.6347

88.5453

85.8424

91.2748

2015

94.9784

87.5083

89.3276

84.6991

90.9788

2014

94.5984

82.9398

90.7045

83.1346

89.7633

2013

93.9009

84.2812

89.3185

82.5478

88.1393

2012

93.9524

85.6749

89.3669

81.9913

88.0168

2011

94.2025

87.1293

90.3357

82.3684

87.9945

2010

94.7658

88.4262

91.3398

83.2518

88.5587

2009

95.3902

89.7489

91.7494

83.8871

89.8408

2008

97.5924

91.0980

94.0873

85.8606

91.6956

Taxpayer Not Using the Composite Method

2007

98.4640

92.4736

95.5247

87.1320

93.0752

82.5478

88.1393

2012

93.9524

85.6749

89.3669

81.9913

88.0168

2011

94.2025

87.1293

90.3357

82.3684

87.9945

2010

94.7658

88.4262

91.3398

83.2518

88.5587

2009

95.3902

89.7489

91.7494

83.8871

89.8408

2008

97.5924

91.0980

94.0873

85.8606

91.6956

Taxpayer Not Using the Composite Method

2007

98.4640

92.4736

95.5247

87.1320

93.0752

2006

98.4640

93.8753

96.9877

88.4289

94.4760

2005

98.4640

95.3017

98.4640

89.7517

95.8902

2004

98.4640

96.7473

98.4640

91.1009

97.2894

2003

98.4640

98.1839

98.4640

92.4766

98.4640

2002

98.4640

93.8785

98.4640

2001

98.4640

95.3051

98.4640

2000

98.4640

96.7511

98.4640

1999

98.4640

98.1886

98.4640

Years before 1999

98.4640

Taxpayer Using the Composite Method

Years before 2008

98.464

94.4219

96.4942

90.7644

94.8105

SECTION 5. APPLICATION OF DISCOUNT FACTORS IN SUBSEQUENT YEARS

Unless revised discount factors have been published, any taxpayer using

discount factors prescribed herein to compute discounted unpaid losses under § 846 in

the first taxable year beginning after December 31, 2017, must use the discount factors

prescribed in Tables 5 and 6 in subsequent taxable years for purposes of determining

the unpaid losses and expenses unpaid (as defined in § 832(b)(5) and (6)) attributable

to accident year 2018, the unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2))

attributable to accident year 2018, and salvage recoverable attributable to accident year

2018

mber 31, 2017, must use the discount factors

prescribed in Tables 5 and 6 in subsequent taxable years for purposes of determining

the unpaid losses and expenses unpaid (as defined in § 832(b)(5) and (6)) attributable

to accident year 2018, the unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2))

attributable to accident year 2018, and salvage recoverable attributable to accident year

2018.

Table 5 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business

Taxable

Year

Beginning in

Auto Physical

Damage

Fidelity/Surety

Financial

Guaranty/

Mortgage

Guaranty

International

Other*

2018

98.2924

95.7528

95.5027

96.0825

96.9295

2019

96.9631

Taxpayer Not Using Composite Method

Years after 2019

98.4640

Composite Discount Factors

2020

98.4640

Years after 2020

Use composite discount factors published for the relevant accident year.**

* For Accident and Health lines of business (other than disability income or credit disability insurance), the

discount factor for taxable year 2018 is 98.4640 percent. For later years, the discount factor for losses

incurred in 2018 is the discount factor published for Accident and Health lines of business for losses

incurred in the accident year coinciding with the taxable year.

**The relevant accident year is the accident year that is two years prior to the specified taxable year

ty insurance), the

discount factor for taxable year 2018 is 98.4640 percent. For later years, the discount factor for losses

incurred in 2018 is the discount factor published for Accident and Health lines of business for losses

incurred in the accident year coinciding with the taxable year.

**The relevant accident year is the accident year that is two years prior to the specified taxable year.

Table 5 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business

Taxable

Year

Beginning in

Reinsurance -

Nonproportional

Assumed

Financial Lines

Reinsurance -

Nonproportional

Assumed

Liability

Reinsurance -

Nonproportional

Assumed

Property

Special

Property

(Fire,

Allied

Lines,

Inland

Marine,

Earthquake,

Burglary &

Theft)

Warranty

Short-Tail

Composite

2018

95.3460

94.5342

96.0638

97.3657

98.0866

96.8171

2019

96.9631

Taxpayer Not Using Composite Method

Years after 2019

98.4640

Composite Discount Factors

2020

98.4640

Years after 2020

Use composite discount factors published for the relevant accident year.**

**The relevant accident year is the accident year that is two years prior to the specified taxable year

Method

Years after 2019

98.4640

Composite Discount Factors

2020

98.4640

Years after 2020

Use composite discount factors published for the relevant accident year.**

**The relevant accident year is the accident year that is two years prior to the specified taxable year.

Table 6 (part A)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business

Taxable

Year

Beginning in

Commercial

Auto/Truck

Liability/Medica

Medical

Professiona

Liability -

Claims-

Made

Medical

Professiona

Liability -

Occurrence

Multipl

e Peril

Lines

Other

Liabilit

y -

Claims-

Made

Other

Liability -

Occurrenc

2018

93.7136

91.1847

86.1703

95.0382

90.3833

88.7841

2019

94.4581

92.2226

88.3371

93.3147

91.2289

89.6647

2020

95.0089

92.4524

89.9455

93.6251

91.7605

90.2415

2021

95.0495

92.7481

91.3552

92.8232

91.8038

90.4153

2022

94.9245

92.8961

92.3529

90.9251

91.6496

90.1639

2023

94.7625

92.9180

93.1329

91.1314

92.1818

90.2353

2024

95.0535

93.9081

93.9891

90.8234

92.6788

90.2570

2025

94.6859

94.8439

94.7064

90.5036

93.4801

91.5250

2026

96.1971

95.7805

95.8926

93.1447

94.6287

92.1970

2027

98.2598

97.6158

97.6580

94.5519

96.4911

94.1762

Taxpayer Not Using Composite Method

2028

98.4640

95.9642

97.8837

95.6063

2029

98.4640

97.3555

98.4640

97.0517

Years after

2029

98.4640

Composite Discount Factors

2028

98.4640

96.7357

97.9777

96.5363

Years after

2028

Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year

97.3555

98.4640

97.0517

Years after

2029

98.4640

Composite Discount Factors

2028

98.4640

96.7357

97.9777

96.5363

Years after

2028

Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year.

Table 6 (part B)

Factors for Discounting Unpaid Losses Under Section 846 (percent)

For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business

Taxable

Year

Beginning in

Private

Passenger

Auto Liability/

Medical

Products

Liability -

Claims-Made

Products

Liability -

Occurrence

Workers'

Compensation

Long-Tail

Composite

2018

95.4241

85.1518

87.1543

87.4184

92.3564

2019

95.0203

85.6347

88.5453

85.8424

91.2748

2020

94.9784

87.5083

89.3276

84.6991

90.9788

2021

94.5984

82.9398

90.7045

83.1346

89.7633

2022

93.9009

84.2812

89.3185

82.5478

88.1393

2023

93.9524

85.6749

89.3669

81.9913

88.0168

2024

94.2025

87.1293

90.3357

82.3684

87.9945

2025

94.7658

88.4262

91.3398

83.2518

88.5587

2026

95.3902

89.7489

91.7494

83.8871

89.8408

2027

97.5924

91.0980

94.0873

85.8606

91.6956

Taxpayer Not Using Composite Method

2028

98.4640

92.4736

95.5247

87.1320

93.0752

2029

98.4640

93.8753

96.9877

88.4289

94.4760

2030

98.4640

95.3017

98.4640

89.7517

95.8902

2031

98.4640

96.7473

98.4640

91.1009

97.2894

2032

98.4640

98.1839

98.4640

92.4766

98.4640

2033

98.4640

93.8785

98.4640

2034

98.4640

95.3051

98.4640

2035

98.4640

96.7511

98.4640

2036

98.4640

98.1886

98.4640

Years after 2036

98.4640

Composite Discount Factors

2028

98.464

94.4219

96.4942

90.7644

94.8105

Years after 2028

Use composi

4640

98.4640

93.8785

98.4640

2034

98.4640

95.3051

98.4640

2035

98.4640

96.7511

98.4640

2036

98.4640

98.1886

98.4640

Years after 2036

98.4640

Composite Discount Factors

2028

98.464

94.4219

96.4942

90.7644

94.8105

Years after 2028

Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year.

SECTION 6. REVISED DISCOUNT FACTORS

.01 If revised unpaid loss discount factors for the 2018 accident year are

published after final regulations are published in the Federal Register, the Treasury

Department and IRS propose to issue guidance providing that taxpayers must use, for

taxable years ending on or after the date the final regulations are published, the revised

discount factors for purposes of determining, for all accident years ending with or before

calendar year 2018, the unpaid losses and expenses unpaid (as defined in § 832(b)(5)

and (6)) and the unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2)).

.02 The Treasury Department and IRS propose that such guidance would

instruct any taxpayer that used the discount factors prescribed in this revenue

procedure in a taxable year beginning after December 31, 2017, and that does not

amend the return filed for such taxable year to use the revised discount factors, to take

into account the difference between the amount of the TCJA adjustment determined

using the unpaid loss discount factors prescribed in this revenue procedure and the

amount of the TCJA adjustment determined using the revised unpaid loss discount

factors. The difference would be taken into account ratably over the taxable years

remaining in the TCJA period of adjustment, beginning with the first taxable year in

which the taxpayer uses the revised discount factors

etermined

using the unpaid loss discount factors prescribed in this revenue procedure and the

amount of the TCJA adjustment determined using the revised unpaid loss discount

factors. The difference would be taken into account ratably over the taxable years

remaining in the TCJA period of adjustment, beginning with the first taxable year in

which the taxpayer uses the revised discount factors.

.03 Such guidance would also instruct any taxpayer that used the discount

factors prescribed in this revenue procedure in a taxable year beginning after December

31, 2017, and that does not amend the return filed for such taxable year to use the

revised discount factors, to compute, with respect to the last taxable year in which the

discount factors prescribed in this revenue procedure were used, the adjustment to the

amount of the discounted unpaid losses under § 846 at the end of that taxable year and

the amount of discounted estimated salvage recoverable under § 832 at the end of that

taxable year due to computing those amounts using the revised discount factors rather

than the discount factors prescribed in this revenue procedure. The adjustment would

be computed as follows: (1) from discounted unpaid losses computed using the

discount factors prescribed in this revenue procedure subtract discounted unpaid losses

computed using the revised discount factors, and (2) to the result so obtained, add

estimated salvage computed using the revised discount factors and subtract estimated

salvage computed using the discount factors prescribed in this revenue procedure. A

positive adjustment would be taken into account as an addition to gross income, and a

negative adjustment would be taken into account as a reduction to gross income

ised discount factors, and (2) to the result so obtained, add

estimated salvage computed using the revised discount factors and subtract estimated

salvage computed using the discount factors prescribed in this revenue procedure. A

positive adjustment would be taken into account as an addition to gross income, and a

negative adjustment would be taken into account as a reduction to gross income. The

adjustment would be taken into account either (1) in the first taxable year in which the

taxpayer uses the revised discount factors, or (2) ratably over the taxable years

remaining in the TCJA period of adjustment, beginning with the first taxable year in

which the taxpayer uses the revised discount factors. For the first taxable year in which

a taxpayer uses the revised discount factors, the taxpayer would determine each of the

following as if the revised discount factors had applied in the preceding taxable year:

(1) the unpaid losses and expenses unpaid (as defined in § 832(b)(5) and (6)) at the

end of the preceding taxable year, (2) the unpaid losses (as defined in §§ 805(a)(1) and

807(c)(2)) at the end of the preceding taxable year, and (3) the estimated salvage

recoverable under § 832 at the end of the preceding taxable year.

SECTION 7. REQUEST FOR COMMENTS

The Treasury Department and IRS request comments on the proposed guidance

described in section 6 of this revenue procedure. Comments should be submitted in

writing on or before February 6, 2019, and should contain a reference to this Rev. Proc.

2019-06. All comments will be available for public inspection and copying. Comments

may be submitted in one of three ways:

(1)

By mail to Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2019-

06), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC

20044.

mments should be submitted in

writing on or before February 6, 2019, and should contain a reference to this Rev. Proc.

2019-06. All comments will be available for public inspection and copying. Comments

may be submitted in one of three ways:

(1)

By mail to Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2019-

06), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC

20044.

(2)

Electronically to Notice.Comments@irscounsel.treas.gov. Please include

“Rev. Proc. 2019-06” in both the body of the comment and on the subject

line of any electronic communications. Alternatively, taxpayers may

submit comments electronically via the Federal eRulemaking Portal at

www.regulations.gov (type IRS-2018-0043 in the search field on the

regulations.gov homepage to find this notice and submit comments).

(3)

By hand-delivery Monday through Friday between the hours of 8 a.m. and

4 p.m. to CC:PA:LPD:PR (Rev. Proc. 2019-06), Courier’s Desk, Internal

Revenue Service, 1111 Constitution Ave., NW, Washington, DC 20224.

SECTION 8. DRAFTING INFORMATION

The principal author of this revenue procedure is Kathryn M. Sneade of the Office

of Associate Chief Counsel (Financial Institutions & Products). For further information

regarding this revenue procedure contact Ms. Sneade at (202) 317-6995 (not a toll free

call).

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.