This revenue procedure prescribes the salvage discount factors for the 2014 accident year. These factors must be used to compute discounted estimated salvage recoverable under § 832 of the Internal Revenue Code.
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 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.
Pursuant to § 832(b), the amount of estimated salvage is determined on a discounted basis in accordance with procedures established by the Secretary.
This revenue procedure applies to any taxpayer that is required to discount estimated salvage recoverable under § 832.
.01 The following tables present separately for each line of business the discount factors under § 832 for the 2014 accident year. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2014, which is 1.79 percent, and by assuming all estimated salvage is recovered in the middle of the calendar year.
.02 These tables must be used by taxpayers irrespective of whether they elected to discount unpaid losses using their own experience under § 846(e).
.03 Section V of Notice 88–100, 1988–2 C.B. 439, provides a composite discount factor to be used in determining the discounted unpaid losses for accident years that are not separately reported on the annual statement approved by the National Association of Insurance Commissioners. The tables separately provide discount factors for taxpayers who elect to use the composite method. Rev. Proc. 2002–74, 2002–2 C.B. 980, clarifies that for certain insurance companies subject to tax under § 831 the composite method for discounting unpaid losses set forth in Notice 88–100, section V, is permitted but not required. Rev. Proc. 2002–74 further provides alternative methods for computing discounted unpaid losses that are permitted for insurance companies not using the composite method, and sets forth a procedure for insurance companies to obtain automatic consent of the Commissioner to change to one of the methods described therein.
.04 Tables.
Taxpayers that do not use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable with respect to losses incurred in this line of business in the 2014 accident year as of the end of the 2014 and later taxable years.
Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount all salvage recoverable in this line of business as of the end of the 2014 taxable year.
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 98.7423 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.7325 |
| 2015 | 96.3843 |
| 2016 | 96.6665 |
| 2017 | 96.2440 |
| 2018 | 96.5723 |
| 2019 | 96.3659 |
| 2020 | 93.6195 |
| 2021 | 92.4758 |
| 2022 | 94.2956 |
| 2023 | 95.1153 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 95.9425 |
| 2025 | 96.7754 |
| 2026 | 97.6093 |
| 2027 | 98.4282 |
| 2028 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 96.0678 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.5134 |
| 2015 | 96.3694 |
| 2016 | 96.5122 |
| 2017 | 95.5187 |
| 2018 | 95.8346 |
| 2019 | 95.5449 |
| 2020 | 95.4539 |
| 2021 | 95.8855 |
| 2022 | 95.9009 |
| 2023 | 96.7345 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 97.5703 |
| 2025 | 98.3948 |
| 2026 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 97.8773 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 97.1917 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.8703 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.5134 |
| 2015 | 96.3694 |
| 2016 | 96.5122 |
| 2017 | 95.5187 |
| 2018 | 95.8346 |
| 2019 | 95.5449 |
| 2020 | 95.4539 |
| 2021 | 95.8855 |
| 2022 | 95.9009 |
| 2023 | 96.7345 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 97.5703 |
| 2025 | 98.3948 |
| 2026 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 97.8773 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.0526 |
| 2015 | 96.6202 |
| 2016 | 95.0588 |
| 2017 | 96.8818 |
| 2018 | 97.0316 |
| 2019 | 97.3423 |
| 2020 | 97.9353 |
| 2021 | 98.3367 |
| 2022 | 98.3235 |
| 2023 | 99.1168 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.4719 |
| 2015 | 97.8218 |
| 2016 | 97.4678 |
| 2017 | 98.2840 |
| 2018 | 97.6293 |
| 2019 | 98.5357 |
| 2020 | 98.1177 |
| 2021 | 98.1691 |
| 2022 | 96.9838 |
| 2023 | 97.8150 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 98.6191 |
| 2025 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 98.6898 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 97.6023 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 96.9791 |
| 2015 | 96.9479 |
| 2016 | 97.2874 |
| 2017 | 96.0346 |
| 2018 | 97.0669 |
| 2019 | 97.3816 |
| 2020 | 97.4797 |
| 2021 | 97.4149 |
| 2022 | 97.1966 |
| 2023 | 99.1168 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 98.0762 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 95.9092 |
| 2015 | 96.1565 |
| 2016 | 96.1868 |
| 2017 | 96.9451 |
| 2018 | 96.9744 |
| 2019 | 97.0833 |
| 2020 | 97.8158 |
| 2021 | 97.7968 |
| 2022 | 97.9792 |
| 2023 | 98.7913 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 93.8186 |
| 2015 | 94.5698 |
| 2016 | 95.3574 |
| 2017 | 95.7908 |
| 2018 | 96.3014 |
| 2019 | 97.0076 |
| 2020 | 97.1268 |
| 2021 | 97.0645 |
| 2022 | 98.2897 |
| 2023 | 99.1168 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 97.5561 |
| 2015 | 97.4705 |
| 2016 | 97.4544 |
| 2017 | 97.0578 |
| 2018 | 97.0480 |
| 2019 | 97.1429 |
| 2020 | 96.9880 |
| 2021 | 97.1983 |
| 2022 | 98.0209 |
| 2023 | 98.8382 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 93.4898 |
| 2015 | 94.5254 |
| 2016 | 93.3374 |
| 2017 | 96.8473 |
| 2018 | 95.5103 |
| 2019 | 98.8605 |
| 2020 | 97.7007 |
| 2021 | 90.7891 |
| 2022 | 98.9061 |
| 2023 | 99.1168 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 94.0709 |
| 2015 | 94.1348 |
| 2016 | 94.6993 |
| 2017 | 95.5583 |
| 2018 | 95.9410 |
| 2019 | 96.5187 |
| 2020 | 96.4711 |
| 2021 | 97.9185 |
| 2022 | 97.5355 |
| 2023 | 98.3655 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 95.4619 |
| 2015 | 96.9712 |
| 2016 | 95.5913 |
| 2017 | 94.7682 |
| 2018 | 96.2298 |
| 2019 | 95.5500 |
| 2020 | 98.0696 |
| 2021 | 93.7236 |
| 2022 | 97.4473 |
| 2023 | 98.2942 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 97.7839 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 91.8961 |
| 2015 | 93.4287 |
| 2016 | 89.8887 |
| 2017 | 90.7734 |
| 2018 | 94.6399 |
| 2019 | 96.6265 |
| 2020 | 96.0780 |
| 2021 | 96.4434 |
| 2022 | 95.3130 |
| 2023 | 97.8830 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 98.6881 |
| 2025 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 98.7373 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 92.4687 |
| 2015 | 93.5870 |
| 2016 | 95.9473 |
| 2017 | 96.0353 |
| 2018 | 96.9299 |
| 2019 | 95.6978 |
| 2020 | 96.9455 |
| 2021 | 96.9062 |
| 2022 | 98.9756 |
| 2023 | 99.1168 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 97.7085 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 97.4036 |
| 2015 | 98.2453 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factor to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2016 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 99.1168 percent to discount salvage recoverable as of the end of the 2016 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
| Tax Year | Discount Factors |
|---|---|
| (%) | |
| 2014 | 94.5251 |
| 2015 | 95.5384 |
| 2016 | 96.0785 |
| 2017 | 95.1114 |
| 2018 | 94.7198 |
| 2019 | 94.2792 |
| 2020 | 94.6788 |
| 2021 | 95.6107 |
| 2022 | 95.7908 |
| 2023 | 96.6277 |
| Taxpayers that do not use the composite method of Notice 88–100 should use the following factors to discount salvage recoverable as of the end of the tax year shown with respect to losses incurred in this line of business in the 2014 accident year. | |
| 2024 | 97.4704 |
| 2025 | 98.3125 |
| 2026 and later years | 99.1168 |
| Taxpayers that use the composite method of Notice 88–100 should use 97.8091 percent to discount salvage recoverable as of the end of the 2024 taxable year with respect to losses incurred in this line of business in 2014 and prior years. | |
The principal author of this revenue procedure is David Remus of the Office of Associate Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Mr. Remus on (202) 317-6995 (not a toll free number).
26 CFR 601.602: Tax forms and instructions.
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