rp-15-54.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.201: Rulings and determination letters.
(Also: Part I, Section 832, 846; 1.832-4, 1.846-1.)

Rev. Proc. 2015-54

SECTION 1. PURPOSE
This revenue procedure prescribes the salvage discount factors for the 2015 accident
year. These factors must be used to compute discounted estimated salvage recoverable under
§ 832 of the Internal Revenue Code.
SECTION 2. BACKGROUND
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

2
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.
SECTION 3. SCOPE
This revenue procedure applies to any taxpayer that is required to discount estimated
salvage recoverable under § 832.
SECTION 4. TABLES OF DISCOUNT FACTORS
.01 The following tables present separately for each line of business the discount factors
under § 832 for the 2015 accident year. All the discount factors presented in this section were
determined using the applicable interest rate under § 846(c) for 2015, which is 1.68 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

3
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.
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 99.1704
percent to discount salvage recoverable with respect to losses incurred in this line of
business in the 2015 accident year as of the end of the 2015 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 99.1704 percent
to discount all salvage recoverable in this line of business as of the end of the 2015
taxable year.

Auto Physical Damage

Discount
Tax Year Factors
(%)

2015 98.8182
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

4
Commercial Auto/Truck Liability/Medical

Discount
Tax Year Factors
(%)

2015 96.9251
2016 96.5972
2017 96.8626
2018 96.4644
2019 96.7729
2020 96.5774
2021 93.9900
2022 92.9148
2023 94.6305
2024 95.4038

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 2015 accident year.

2025 96.1834
2026 96.9679
2027 97.7528
2028 98.5231
2029 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 96.7254 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

5
Composite

Discount
Tax Year Factors
(%)

2015 96.7187
2016 96.5829
2017 96.7169
2018 95.7813
2019 96.0790
2020 95.8066
2021 95.7216
2022 96.1287
2023 96.1442
2024 96.9294

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 2015 accident year.

2025 97.7161
2026 98.4916
2027 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.1110 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

6
Fidelity/Surety

Discount
Tax Year Factors
(%)

2015 97.3600
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

7
Financial Guaranty/Mortgage Guaranty

Discount
Tax Year Factors
(%)

2015 97.0578
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

8
International (Composite)

Discount
Tax Year Factors
(%)

2015 96.7187
2016 96.5829
2017 96.7169
2018 95.7813
2019 96.0790
2020 95.8066
2021 95.7216
2022 96.1287
2023 96.1442
2024 96.9294

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 2015 accident year.

2025 97.7161
2026 98.4916
2027 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.1110 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

9
Medical Professional Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2015 96.2853
2016 96.8197
2017 95.3511
2018 97.0671
2019 97.2086
2020 97.5013
2021 98.0593
2022 98.4368
2023 98.4246
2024 99.1704

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

10
Medical Professional Liability -- Occurrence

Discount
Tax Year Factors
(%)

2015 96.6820
2016 97.9520
2017 97.6193
2018 98.3869
2019 97.7715
2020 98.6238
2021 98.2305
2022 98.2787
2023 97.1641
2024 97.9463

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 2015 accident year.

2025 98.7026
2026 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.7946 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

11
Miscellaneous Casualty

Discount
Tax Year Factors
(%)

2015 97.7462
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

12
Multiple Peril Lines (Homeowners/Farmowners, Commercial Multiple Peril, and Special
Liability (Ocean Marine, Aircraft (All Perils), Boiler and Machinery))

Discount
Tax Year Factors
(%)

2015 97.1583
2016 97.1289
2017 97.4482
2018 96.2697
2019 97.2414
2020 97.5378
2021 97.6302
2022 97.5696
2023 97.3653
2024 99.1704

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

13
Other (Including Credit)

Discount
Tax Year Factors
(%)

2015 98.1918
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

14
Other Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2015 96.1502
2016 96.3835
2017 96.4127
2018 97.1266
2019 97.1544
2020 97.2574
2021 97.9465
2022 97.9289
2023 98.1008
2024 98.8644

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

15
Other Liability -- Occurrence

Discount
Tax Year Factors
(%)

2015 94.1793
2016 94.8881
2017 95.6307
2018 96.0395
2019 96.5208
2020 97.1856
2021 97.2982
2022 97.2404
2023 98.3928
2024 99.1704

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

16
Private Passenger Auto Liability/Medical

Discount
Tax Year Factors
(%)

2015 97.7016
2016 97.6211
2017 97.6057
2018 97.2325
2019 97.2234
2020 97.3129
2021 97.1676
2022 97.3660
2023 98.1400
2024 98.9085

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

17
Products Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2015 93.8701
2016 94.8470
2017 93.7313
2018 97.0350
2019 95.7792
2020 98.9292
2021 97.8379
2022 91.3409
2023 98.9724
2024 99.1704

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

18
Products Liability -- Occurrence

Discount
Tax Year Factors
(%)

2015 94.4161
2016 94.4776
2017 95.0104
2018 95.8201
2019 96.1811
2020 96.7254
2021 96.6815
2022 98.0432
2023 97.6834
2024 98.4641

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

19
Reinsurance -- Nonproportional Assumed Property

Discount
Tax Year Factors
(%)

2015 95.7288
2016 97.1495
2017 95.8501
2018 95.0763
2019 96.4528
2020 95.8143
2021 98.1847
2022 94.0969
2023 97.6004
2024 98.3971

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.8352 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

20
Reinsurance -- Nonproportional Assumed Liability

Discount
Tax Year Factors
(%)

2015 92.3615
2016 93.8075
2017 90.4743
2018 91.3125
2019 94.9554
2020 96.8258
2021 96.3100
2022 96.6545
2023 95.5926
2024 98.0103

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 2015 accident year.

2025 98.7674
2026 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.8364 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

21
Reinsurance -- Nonproportional Assumed Financial Lines

Discount
Tax Year Factors
(%)

2015 92.9077
2016 93.9633
2017 96.1863
2018 96.2697
2019 97.1118
2020 95.9533
2021 97.1279
2022 97.0921
2023 99.0377
2024 99.1704

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 2015 accident year.

2025 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

22
Special Property (Fire, Allied Lines, Inland Marine, Earthquake, Burglary and Theft)

Discount
Tax Year Factors
(%)

2015 97.8460
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

23

Warranty

Discount
Tax Year Factors
(%)

2015 97.5593
2016 98.3512

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 2015 accident year.

2017 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 99.1704 percent to discount
salvage recoverable as of the end of the 2017
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

24
Workers' Compensation

Discount
Tax Year Factors
(%)

2015 94.8444
2016 95.7991
2017 96.3073
2018 95.3961
2019 95.0278
2020 94.6138
2021 94.9915
2022 95.8699
2023 96.0405
2024 96.8288

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 2015 accident year.

2025 97.6221
2026 98.4143
2027 and later years 99.1704

Taxpayers that use the composite method of Notice
88-100 should use 98.0545 percent to discount
salvage recoverable as of the end of the 2025
taxable year with respect to losses incurred in this
line of business in 2015 and prior years.

SECTION 5. DRAFTING INFORMATION

The principal author of this revenue procedure is Linda K. Boyd of the Office of
Associate Chief Counsel (Financial Institutions & Products). For further information regarding
this revenue procedure contact Ms. Boyd at (202) 317-6995 (not a toll free call).