IRS gives relief to policyholders
Article Abstract:
The Internal Revenue Service will give tax-free treatment to taxpayers who cancel a life insurance policy or an annuity issued by a troubled insurance company and buy a policy or annuity with another company. Troubled insurance companies are required to pay the new policy issuer the cash value to be distributed and the residual value of the contract. The IRS has ruled that such exchanges of annuity contracts will not create a taxable gain for the taxpayer if the old company is a troubled insurer subject to a state proceeding of insolvency, rehabilitation, or conservatorship.
Publication Name: Best's Review Life-Health Insurance Edition
Subject: Insurance
ISSN: 0275-0988
Year: 1992
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IRS issues DAC regulations
Article Abstract:
The proposed regulations on capitalization of deferred acquisition costs issued by the Internal Revenue Service contain little that was not expected by the insurance industry. The rules are similar to those in the 1990 Tax Act. A point of concern, however, has developed in the definition of 'association groups.' Also at issue is the reinsurance provision requiring proof that there is no capitalization shortfall. The legal impact of the rules should be considered.
Publication Name: Best's Review Life-Health Insurance Edition
Subject: Insurance
ISSN: 0275-0988
Year: 1992
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