rp-01-48.pdf

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# Part III - Administrative, Procedural, and Miscellaneous

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.

Revenue Procedure 2001-48

## SECTION 1. PURPOSE

This revenue procedure provides the domestic asset/liability percentages and domestic
investment yields needed by foreign life insurance companies and foreign property and liability
insurance companies to compute their minimum effectively connected net investment income
under section 842(b) of the Internal Revenue Code for taxable years beginning after December
31, 1999. Instructions are provided for computing foreign insurance companies' liabilities for the
estimated tax and installment payments of estimated tax for taxable years beginning after
December 31, 1999. For more specific guidance regarding the computation of the amount of net
investment income to be included by a foreign insurance company on its U.S. income tax return,
see Notice 89-96, 1989-2 C.B. 417. For the domestic asset/liability percentage and domestic
investment yield, as well as instructions for computing foreign insurance companies' liabilities
for estimated tax and installment payments of estimated tax for taxable years beginning after
December 31, 1998, see Rev. Proc. 2000-32, 2000-33, I.R.B.
.

## SECTION 2. CHANGES

.01 DOMESTIC ASSET/LIABILITY PERCENTAGES FOR 2000. The Secretary determines
the domestic asset/liability percentage separately for life insurance companies and property and
liability insurance companies. For the first taxable year beginning after December 31, 1999, the
relevant domestic asset/liability percentages are:

114.2 percent for foreign life insurance companies, and

201.6 percent for foreign property and liability insurance companies.

.02 DOMESTIC INVESTMENT YIELDS FOR 2000. The Secretary is required to prescribe
separate domestic investment yields for foreign life insurance companies and for foreign property
and liability insurance companies. For the first taxable year beginning after December 31, 1999,
the relevant domestic investment yields are:

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### 8.2 percent for foreign life insurance companies, and

5.6 percent for foreign property and liability insurance companies.

.03 SOURCE OF DATA FOR 2000. The section 842(b) percentages to be used for the 2000 tax
year are based on tax return data following the same methodology used for the 1999 year.

#### SECTION 3. APPLICATION -- ESTIMATED TAXES

To compute estimated tax and the installment payments of estimated tax due for taxable years
beginning after December 31, 1999, a foreign insurance company must compute its estimated tax
payments by adding to its income other than net investment income the greater of (i) its net
investment income as determined under section 842(b)(5), that is actually effectively connected
with the conduct of a trade or business within the United States for the relevant period, or (ii) the
minimum effectively connected net investment income under section 842(b) that would result
from using the most recently available domestic asset/liability percentage and domestic
investment yield. Thus, for installment payments due after the publication of this revenue
procedure, the domestic asset/liability percentages and the domestic investment yields provided
in this revenue procedure must be used to compute the minimum effectively connected net
investment income. However, if the due date of an installment is less than 20 days after the date
this revenue procedure is published in the Internal Revenue Bulletin, the asset/liability
percentages and domestic investment yields provided in Rev. Proc. 2000-32 may be used to
compute the minimum effectively connected net investment income for such installment. For
further guidance in computing estimated tax, see Notice 89-96.

#### SECTION 4. EFFECTIVE DATE

This revenue procedure is effective for taxable years beginning after December 31, 1999.

#### DRAFTING INFORMATION

The principal author of this revenue procedure is Garrett D. Gregory of the Office of the
Associate Chief Counsel (International). For further information regarding this revenue
procedure, please contact Mr. Gregory at (202) 622-4461 (not a toll-free call), or write to the
Internal Revenue Service, Office of the Associate Chief Counsel (International), 1111
Constitution Avenue, NW, Washington, DC 20224, Attention: CC:INTL:Br5, Room 4554.