rp-14-60.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. 2014-60

SECTION 1. PURPOSE
This revenue procedure prescribes the salvage discount factors for the 2014 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 2014 accident year. All the discount factors presented in this section were
determined using the applicable interest rate under § 846(c) for 2014, which is 1.79 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 99.1168
percent to discount salvage recoverable with respect to losses incurred in this line of
business in the 2014 accident year as of the end of the 2014 and later taxable years.

Taxpayers that use the composite method of Notice 88-100 should use 99.1168 percent
to discount all salvage recoverable in this line of business as of the end of the 2014
taxable year.

Auto Physical Damage

Discount
Tax Year Factors
(%)

2014 98.7423
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

4
Commercial Auto/Truck Liability/Medical

Discount
Tax Year Factors
(%)

2014 96.7325
2015 96.3843
2016 96.6665
2017 96.2440
2018 96.5723
2019 96.3659
2020 93.6195
2021 92.4758
2022 94.2956
2023 95.1153

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 2014 accident year.

2024 95.9425
2025 96.7754
2026 97.6093
2027 98.4282
2028 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 96.0678 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

5
Composite

Discount
Tax Year Factors
(%)

2014 96.5134
2015 96.3694
2016 96.5122
2017 95.5187
2018 95.8346
2019 95.5449
2020 95.4539
2021 95.8855
2022 95.9009
2023 96.7345

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 2014 accident year.

2024 97.5703
2025 98.3948
2026 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 97.8773 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

6
Fidelity/Surety

Discount
Tax Year Factors
(%)

2014 97.1917
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

7
Financial Guaranty/Mortgage Guaranty

Discount
Tax Year Factors
(%)

2014 96.8703
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

8
International (Composite)

Discount
Tax Year Factors
(%)

2014 96.5134
2015 96.3694
2016 96.5122
2017 95.5187
2018 95.8346
2019 95.5449
2020 95.4539
2021 95.8855
2022 95.9009
2023 96.7345

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 2014 accident year.

2024 97.5703
2025 98.3948
2026 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 97.8773 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

9
Medical Professional Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2014 96.0526
2015 96.6202
2016 95.0588
2017 96.8818
2018 97.0316
2019 97.3423
2020 97.9353
2021 98.3367
2022 98.3235
2023 99.1168

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

10
Medical Professional Liability -- Occurrence

Discount
Tax Year Factors
(%)

2014 96.4719
2015 97.8218
2016 97.4678
2017 98.2840
2018 97.6293
2019 98.5357
2020 98.1177
2021 98.1691
2022 96.9838
2023 97.8150

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 2014 accident year.

2024 98.6191
2025 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 98.6898 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

11
Miscellaneous Casualty

Discount
Tax Year Factors
(%)

2014 97.6023
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 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
(%)

2014 96.9791
2015 96.9479
2016 97.2874
2017 96.0346
2018 97.0669
2019 97.3816
2020 97.4797
2021 97.4149
2022 97.1966
2023 99.1168

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

13
Other (Including Credit)

Discount
Tax Year Factors
(%)

2014 98.0762
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

14
Other Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2014 95.9092
2015 96.1565
2016 96.1868
2017 96.9451
2018 96.9744
2019 97.0833
2020 97.8158
2021 97.7968
2022 97.9792
2023 98.7913

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

15
Other Liability -- Occurrence

Discount
Tax Year Factors
(%)

2014 93.8186
2015 94.5698
2016 95.3574
2017 95.7908
2018 96.3014
2019 97.0076
2020 97.1268
2021 97.0645
2022 98.2897
2023 99.1168

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

16
Private Passenger Auto Liability/Medical

Discount
Tax Year Factors
(%)

2014 97.5561
2015 97.4705
2016 97.4544
2017 97.0578
2018 97.0480
2019 97.1429
2020 96.9880
2021 97.1983
2022 98.0209
2023 98.8382

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

17
Products Liability -- Claims-Made

Discount
Tax Year Factors
(%)

2014 93.4898
2015 94.5254
2016 93.3374
2017 96.8473
2018 95.5103
2019 98.8605
2020 97.7007
2021 90.7891
2022 98.9061
2023 99.1168

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

18
Products Liability -- Occurrence

Discount
Tax Year Factors
(%)

2014 94.0709
2015 94.1348
2016 94.6993
2017 95.5583
2018 95.9410
2019 96.5187
2020 96.4711
2021 97.9185
2022 97.5355
2023 98.3655

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

19
Reinsurance -- Nonproportional Assumed Property

Discount
Tax Year Factors
(%)

2014 95.4619
2015 96.9712
2016 95.5913
2017 94.7682
2018 96.2298
2019 95.5500
2020 98.0696
2021 93.7236
2022 97.4473
2023 98.2942

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 97.7839 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

20
Reinsurance -- Nonproportional Assumed Liability

Discount
Tax Year Factors
(%)

2014 91.8961
2015 93.4287
2016 89.8887
2017 90.7734
2018 94.6399
2019 96.6265
2020 96.0780
2021 96.4434
2022 95.3130
2023 97.8830

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 2014 accident year.

2024 98.6881
2025 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 98.7373 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

21
Reinsurance -- Nonproportional Assumed Financial Lines

Discount
Tax Year Factors
(%)

2014 92.4687
2015 93.5870
2016 95.9473
2017 96.0353
2018 96.9299
2019 95.6978
2020 96.9455
2021 96.9062
2022 98.9756
2023 99.1168

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 2014 accident year.

2024 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

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

Discount
Tax Year Factors
(%)

2014 97.7085
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

23

Warranty

Discount
Tax Year Factors
(%)

2014 97.4036
2015 98.2453

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 2014 accident year.

2016 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 99.1168 percent to discount
salvage recoverable as of the end of the 2016
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

24
Workers' Compensation

Discount
Tax Year Factors
(%)

2014 94.5251
2015 95.5384
2016 96.0785
2017 95.1114
2018 94.7198
2019 94.2792
2020 94.6788
2021 95.6107
2022 95.7908
2023 96.6277

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 2014 accident year.

2024 97.4704
2025 98.3125
2026 and later years 99.1168

Taxpayers that use the composite method of Notice
88-100 should use 97.8091 percent to discount
salvage recoverable as of the end of the 2024
taxable year with respect to losses incurred in this
line of business in 2014 and prior years.

SECTION 5. DRAFTING INFORMATION

The principal author of this revenue procedure is David Remus of the Office of Associate
Chief Counsel (Financial Institutions & Products). For further information regarding this
revenue procedure contact Mr. Remus on (202) 317-6995 (not a toll free call).