P&C Concepts Series - Federal Income Tax Overview

This course introduces you to the fundamental Federal Income tax concepts applicable to Property and Casualty companies, provides an overview of several key tax adjustments specific to P&C companies, and explores GAAP and statutory financial reporting considerations.

CPE Credits: 2 hours in Taxes

Level: Basic

Prerequisites/Advance Preparation: None

NASBA Publication/Revision Date: May 2020

Learning Objectives

• Identify and apply the criteria for qualifying as a Nonlife insurance company under federal tax law
• Recognize the industry-specific Internal Revenue Code tax adjustments applicable to Nonlife companies
• Apply the deferred tax concepts and distinguish between permanent and temporary differences
• Recognize and distinguish between U.S. GAAP and statutory federal income tax financial reporting

Outline

• Qualification Test
  • Definition of an insurance company
  • Classification of insurance companies
• Annual Statement and Federal Taxation
  • Federal Income Tax Return Accounting Basis
• Nonlife Tax Adjustments
  • Tax Reform Act of 1986
  • Revenue Reconciliation Act of 1990
  • Common Tax Differences
  • Tax Adjustments Specific to P&C Companies
    • 20% Haircut on Unearned Premiums
    • Discounting of Unpaid Losses and LAE
    • Discounting of Accrued Salvage and Subrogation
• Deferred Tax Concepts
  • Financial and Tax Return Differences
  • Explanation of the Deferred Tax Concept
  • Illustration of the Deferred Tax Concept
  • Deferred Tax – The Balance Sheet Method
  • Deferred Tax Illustration - Depreciation
  • Deferred Tax Illustration – Loss Reserves
• GAAP Accounting
  • Provision Calculation
  • Disclosures
• Statutory Accounting
  • Current Tax
  • Deferred Tax
  • Disclosures