Loss Reserve Discount Factor
Author: Matt Scheible
The IRS recently released the annual revenue procedures that provide 2016 accident-year discounting factors for loss reserves and anticipated salvage and subrogation. The procedures also include the discount rate used to compute 2016 accident-year factors under the company factor election.
For companies that previously elected to compute tax loss reserves using the company factor, the applicable interest rate under Internal Revenue Code Section 846(c) is 1.56 percent for the 2016 accident year based on claims development in the 2014 annual statement.
If you have questions about loss reserve or salvage and subrogation discounting, contact your BKD advisor.