Tax News

CCH (cch.taxgroup.com) reports:

For purposes of determining the net increase or decrease in a life insurance company's reserves, where some or all of the reserves for a variable contract are accounted for as part of the company's separate account reserves, the amount of the end-of-year reserves is determined under the general rules for determining tax reserves for any contract and the required interest on the contract's reserve is calculated by multiplying the mean of the contract's beginning-of-year and end-of-year reserves by the applicable federal interest rate for the contract. This is the case even if the amount of the end-of-year reserve is different from the amount of the end-of-year net surrender value for the contract or the amount taken into account in determining the end-of-year statutory reserve for the contract.
The calculation method is the same even if a portion of the required interest is not attributable to policy interest. If , for instance, the contract includes a minimum guaranteed death benefit, the required interest attributable to that benefit is allocated to the insurer's general account reserves.
Rev. Rul. 2007-54, 2007FED ¶46,588
Other References:
Code Sec. 807
CCH Reference - 2007FED ¶25,821.25
Code Sec. 812
CCH Reference - 2007FED ¶25,913.35