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SECTION 1. PURPOSE
This revenue procedure prescribes the loss payment patterns and discount factors for the 2013 accident year. These factors will be used to compute discounted unpaid losses under § 846 of the Internal Revenue Code. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645, for background concerning the loss payment patterns and application of the discount factors.
SECTION 2. SCOPE
This revenue procedure applies to any taxpayer that is required to discount unpaid losses under § 846 for a line of business using the discount factors published by the Secretary.
SECTION 3. TABLES OF DISCOUNT FACTORS
.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 2013. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 2013, which is 2.16 percent, and by assuming all loss payments occur in the middle of the calendar year.
.02 If the groupings of individual lines of business on the annual statement change, taxpayers must discount unpaid losses on the resulting line of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 2010 annual statement. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645, section 2, for additional background on discounting under § 846 and the use of the Secretary's tables.
.03 Section V ofNotice 88-100,1988-2 C.B. 439, sets forth a composite method for computing discounted unpaid losses for accident years that are not separately reported on the annual statement. The tables separately provide discount factors for taxpayers who elect to use the composite method of section V ofNotice 88-100. See Rev. Proc. 2002-74, 2002-2 C.B. 980.
.04 Tables.
Accident and Health (Other Than Disability Income or Credit Disability Insurance)
Taxpayers that do not use the composite method of Notice 88-100 should use 98.9372 percent to discount unpaid losses incurred in this line of business in the 2013 accident year and that are outstanding at the end of the 2013 and later taxable years.
Taxpayers that use the composite method of Notice 88-100 should use 98.9372 percent to discount all unpaid losses in this line of business that are outstanding at the end of the 2013 taxable year....