rp-19-06.pdf

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

Rev. Proc. 2019-06

SECTION 1. PURPOSE
This revenue procedure prescribes unpaid loss discount factors for the 2018
accident year for use in computing discounted unpaid losses under § 846 of the Internal
Revenue Code. The unpaid loss discount factors also serve as salvage discount
factors for the 2018 accident year for use in computing discounted estimated salvage
recoverable under § 832. The discount factors prescribed herein were determined
under § 846, as amended by section 13523 of the Tax Cuts and Jobs Act, Pub. L. No.
115-97 (December 22, 2017) (“TCJA”), and proposed regulations under § 846 (REG-
103163-18) published in the Federal Register (83 FR 55646) on November 7, 2018 (the
“proposed regulations”). If necessary after the proposed regulations are published as
final regulations, the Department of the Treasury (the “Treasury Department”) and
Internal Revenue Service (“IRS”) intend to publish for each property and casualty line of
business revised unpaid loss discount factors for the 2018 accident year for use in
taxable years ending on or after the date the final regulations are published.
SECTION 2. BACKGROUND

2

.01 Modification of Discounting Rules
(1) Section 13523 of the TCJA amended § 846 for taxable years beginning after
December 31, 2017. Section 13523(a) and (b) of the TCJA amended the definition of
annual rate under § 846(c) and the computational rules for loss payment patterns under
§ 846(d), respectively. Section 13523(c) of the TCJA repealed the election that was
previously set forth in § 846(e) to use the taxpayer’s own historical loss payment pattern
instead of the pattern published by the Secretary.
(2) Section 13523(e) of the TCJA provides the transitional rule for the application
of the amendments in the first taxable year beginning after December 31, 2017, and for
subsequent taxable years (the “TCJA transition rule”). Specifically, section 13523(e)
provides that, for the first taxable year beginning after December 31, 2017, the unpaid
losses and expenses unpaid (as defined in § 832(b)(5) and (6)) at the end of the
preceding taxable year, and the unpaid losses (as defined in §§ 805(a)(1) and
807(c)(2)) at the end of the preceding taxable year, are determined as if the
amendments made by section 13523 of the TCJA had applied to the unpaid losses and
expenses unpaid in the preceding taxable year and by using the interest rate and loss
payment patterns applicable to accident years ending with calendar year 2018. The
resulting adjustment (the “TCJA adjustment”), if any, is included in the taxpayer’s gross
income ratably over an eight year period (the “TCJA period of adjustment,” which is the
first taxable year beginning after December 31, 2017, and the seven succeeding taxable
years). Section 13523(e) also provides that, for subsequent taxable years, the
amendments made by section 13523 are applied with respect to unpaid losses and

3

expenses unpaid for accident years ending with or before calendar year 2018 by using
the interest rate and loss payment patterns applicable to accident years ending with
calendar year 2018. Loss payment patterns for the 2017 determination year were
previously prescribed in Rev. Proc. 2018-13, 2018-7 I.R.B. 356. In Rev. Proc. 2018-13,
the Treasury Department and IRS also announced the intention to publish revised loss
payment patterns for the 2017 determination year in accordance with the TCJA
transition rule.
.02 Proposed Regulations
(1) Section 1.846-1(c) of the proposed regulations provides that the annual rate
for any calendar year is the average of the monthly spot interest rates on corporate
bonds with times to maturity of not more than seventeen and one-half years based on a
yield curve that reflects the average, for the most recent 60-month period ending before
the beginning of the calendar year, of monthly yields on corporate bonds described in
§ 430(h)(2)(D)(i).
(2) Section 1.846-1(d)(1) of the proposed regulations provides that, in general,
the loss payment pattern determined by the Secretary for each line of business is
determined by reference to the historical loss payment pattern applicable to such line of
business determined in accordance with the method of determination set forth in
§ 846(d)(2) and the computational rules prescribed in § 846(d)(3) on the basis of data
from annual statements described in § 846(d)(2)(A) and (B). However, under § 1.846-
1(d)(2) of the proposed regulations, the Secretary may adjust the loss payment pattern
for any line of business using a methodology described by the Secretary in other

4

published guidance if necessary to avoid negative payment amounts and otherwise
produce a stable pattern of positive discount factors less than one.
.03 Discount Factors for Accident Year 2018 and Prior Accident Years
(1) The discount factors prescribed in this revenue procedure are determined by
using the applicable interest rate for accident year 2018 under § 846(c) and the
proposed regulations and revised loss payment patterns determined by the Secretary
for the 2017 determination year under § 846(d) and the proposed regulations.
(2) Pursuant to § 846(c) and the proposed regulations, the Secretary has
determined that the annual rate for the 2018 calendar year is 3.12 percent,
compounded semiannually. This annual rate is the average of the monthly spot rates
on corporate bonds with times to maturity of not more than seventeen and one-half
years based on a yield curve that reflects the average of monthly yields on corporate
bonds described in § 430(h)(2)(D)(i) for the period from January 2013 through
December 2017 (that is, the most recent 60-month period ending before the beginning
of the 2018 calendar year).
1

(3) Pursuant to § 846(d) and the proposed regulations, the Secretary has
determined a revised loss payment pattern for each property and casualty line of
business for the 2017 determination year for use with respect to unpaid losses incurred
in accident year 2018 and prior accident years. The revised loss payment patterns for
the 2017 determination year are based, initially, on the aggregate loss payment

1
The published yield curve spot rates can be found at https://home.treasury.gov/data/treasury-coupon-
issues-and-corporate-bond-yield-curve/corporate-bond-yield-curve.

5

information reported on the 2015 annual statements of property and casualty insurance
companies and compiled by A.M. Best and Co. The lines of business for the 2017
determination year are the same as the lines of business for the 2012 determination
year. See Rev. Proc. 2012-44, 2012-49 I.R.B. 645. Losses are reported on the annual
statement net of losses on reinsurance ceded, but include losses on assumed
proportional reinsurance. Losses with respect to assumed non-proportional reinsurance
are reported in three separate lines of business (for property, liability, and financial
reinsurance). The loss data include defense, cost containment, adjusting, and other
loss expenses, but are not reduced for salvage and subrogation receipts.
(4) Pursuant to § 1.846-1(d)(2) of the proposed regulations, the Secretary may
adjust the loss payment pattern for any line of business using a methodology described
by the Secretary in other published guidance if necessary to avoid negative payment
amounts and otherwise produce a stable pattern of positive discount factors less than
one. For the 2017 determination year, only one line of business requires adjustments
under the proposed regulations. That line of business is Other Liability – Claims Made.
The initial payment pattern results in negative payment amounts for the fifth, seventh,
and ninth years after the accident year. Therefore, the payment amounts for the fourth
through the ninth year after the accident year are adjusted following the steps listed in
the preamble to the proposed regulations. See 83 FR 55646.
SECTION 3. 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

6

the Secretary, and also applies to any taxpayer that is required to discount estimated
salvage recoverable under § 832. This revenue procedure applies to taxable years
beginning after December 31, 2017.
SECTION 4. TABLES OF DISCOUNT FACTORS
.01 The tables in this section 4 present separately for each line of business the
unpaid loss discount factors under § 846 for use in the first taxable year beginning after
December 31, 2017, and for use in calculating the TCJA adjustment. All of the discount
factors presented in these tables are determined by using the applicable interest rate for
2018 under § 846(c) and the proposed regulations, which is 3.12 percent, compounded
semiannually, and the revised payment patterns for the 2017 determination year
determined by the Secretary under § 846(d) and the proposed regulations. All of the
discount factors presented in these tables are determined by assuming all loss
payments occur in the middle of the calendar year.
.02 Tables 1 and 2 present separately for each line of business the unpaid loss
discount factors under § 846 for use in the first taxable year beginning after December
31, 2017. Any taxpayer using discount factors prescribed in Tables 1 and 2 to compute
discounted unpaid losses under § 846 for its first taxable year beginning after December
31, 2017, must use the discount factors prescribed in Tables 1 and 2 with respect to all
of its property and casualty lines of business and, consistent with the TCJA transition
rule, must use the discount factors prescribed in Tables 1 and 2 for all accident years
ending with or before calendar year 2018. The taxpayer also must use the discount
factors prescribed in Tables 1 and 2 as the salvage discount factors for the 2018

7

accident year and all prior accident years for purposes of determining estimated salvage
recoverable under § 832 with respect to all of its property and casualty lines of business
for its first taxable year beginning after December 31, 2017.
.03 Consistent with the TCJA transition rule, any taxpayer using the discount
factors prescribed in Tables 1 and 2 for its first taxable year beginning after December
31, 2017, must, for that taxable year, use the discount factors prescribed in Tables 3
and 4 for purposes of determining the unpaid losses and expenses unpaid (as defined
in § 832(b)(5) and (6)) at the end of the preceding taxable year, and the unpaid losses
(as defined in §§ 805(a)(1) and 807(c)(2)) at the end of the preceding taxable year. The
taxpayer also must, for its first taxable year beginning after December 31, 2017, use the
unpaid loss discount factors prescribed in Tables 3 and 4 to determine the amount of
the TCJA adjustment to be taken into account in that taxable year and, unless revised
discount factors have been published, the amount of the TCJA adjustment to be taken
into account in subsequent taxable years.
.04 Section V of Notice 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. Tables 1 through 4 separately provide discount
factors for taxpayers who have elected to use the composite method of Notice 88-100.
See Rev. Proc. 2002-74, 2002-2 C.B. 980.

8

Table 1 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Auto
Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2018 98.2924 95.7528 95.5027 96.0825 96.9295
2017 96.9631 96.9631 96.9631 96.9631 96.9631
Years before 2017 98.4640 98.4640 98.4640 98.4640 98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the
discount factor for taxable year 2018 is 98.4640 percent.

Table 1 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional
Assumed
Liability
Reinsurance -
Nonproportional

Assumed
Property
Special
Property
(Fire,
Allied
Lines,
Inland
Marine,
Earthquake,
Burglary &
Theft) Warranty
Short-Tail
Composite

2018 95.3460 94.5342 96.0638 97.3657 98.0866 96.8171
2017 96.9631 96.9631 96.9631 96.9631 96.9631 96.9631
Years before 2017 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

9

Table 2 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-
Made
Medical
Professional
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability -
Claims-
Made
Other
Liability -
Occurrence

2018 93.7136 91.1847 86.1703 95.0382 90.3833 88.7841
2017 94.4581 92.2226 88.3371 93.3147 91.2289 89.6647
2016 95.0089 92.4524 89.9455 93.6251 91.7605 90.2415
2015 95.0495 92.7481 91.3552 92.8232 91.8038 90.4153
2014 94.9245 92.8961 92.3529 90.9251 91.6496 90.1639
2013 94.7625 92.9180 93.1329 91.1314 92.1818 90.2353
2012 95.0535 93.9081 93.9891 90.8234 92.6788 90.2570
2011 94.6859 94.8439 94.7064 90.5036 93.4801 91.5250
2010 96.1971 95.7805 95.8926 93.1447 94.6287 92.1970
2009 98.2598 97.6158 97.6580 94.5519 96.4911 94.1762

Taxpayer Not Using the Composite Method
2008 98.4640 98.4640 98.4640 95.9642 97.8837 95.6063
2007 98.4640 98.4640 98.4640 97.3555 98.4640 97.0517
Years before 2007 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

Taxpayer Using the Composite Method
Years before 2009 98.4640 98.4640 98.4640 96.7357 97.9777 96.5363

Table 2 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Private
Passenger
Auto
Liability/
Medical
Products
Liability -
Claims-Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2018 95.4241 85.1518 87.1543 87.4184 92.3564
2017 95.0203 85.6347 88.5453 85.8424 91.2748

10

2016 94.9784 87.5083 89.3276 84.6991 90.9788
2015 94.5984 82.9398 90.7045 83.1346 89.7633
2014 93.9009 84.2812 89.3185 82.5478 88.1393
2013 93.9524 85.6749 89.3669 81.9913 88.0168
2012 94.2025 87.1293 90.3357 82.3684 87.9945
2011 94.7658 88.4262 91.3398 83.2518 88.5587
2010 95.3902 89.7489 91.7494 83.8871 89.8408
2009 97.5924 91.0980 94.0873 85.8606 91.6956

Taxpayer Not Using the Composite Method
2008 98.4640 92.4736 95.5247 87.1320 93.0752
2007 98.4640 93.8753 96.9877 88.4289 94.4760
2006 98.4640 95.3017 98.4640 89.7517 95.8902
2005 98.4640 96.7473 98.4640 91.1009 97.2894
2004 98.4640 98.1839 98.4640 92.4766 98.4640
2003 98.4640 98.4640 98.4640 93.8785 98.4640
2002 98.4640 98.4640 98.4640 95.3051 98.4640
2001 98.4640 98.4640 98.4640 96.7511 98.4640
2000 98.4640 98.4640 98.4640 98.1886 98.4640
Years before 2000 98.4640 98.4640 98.4640 98.4640 98.4640

Taxpayer Using the Composite Method
Years before 2009 98.464 94.4219 96.4942 90.7644 94.8105

Table 3 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Auto
Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2017 98.2924 95.7528 95.5027 96.0825 96.9295
2016 96.9631 96.9631 96.9631 96.9631 96.9631
Years before 2016 98.4640 98.4640 98.4640 98.4640 98.4640

* For Accident and Health lines of business (other than disability income or credit disability insurance), the
discount factor for taxable year 2017 is 98.4640 percent.

11

Table 3 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Short-Tail Lines of Business
Accident
Year
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional
Assumed
Liability
Reinsurance -
Nonproportional

Assumed
Property
Special
Property
(Fire,
Allied
Lines,
Inland
Marine,
Earthquake,

Burglary &
Theft)
Warranty
Short-Tail
Composite

2017 95.3460 94.5342 96.0638 97.3657 98.0866 96.8171
2016 96.9631 96.9631 96.9631 96.9631 96.9631 96.9631
Years before 2016 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

Table 4 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Commercial
Auto/Truck
Liability/Medical
Medical
Professional
Liability -
Claims-
Made
Medical
Professional
Liability -
Occurrence
Multiple
Peril
Lines
Other
Liability -
Claims-
Made
Other
Liability -
Occurrence

2017 93.7136 91.1847 86.1703 95.0382 90.3833 88.7841
2016 94.4581 92.2226 88.3371 93.3147 91.2289 89.6647
2015 95.0089 92.4524 89.9455 93.6251 91.7605 90.2415
2014 95.0495 92.7481 91.3552 92.8232 91.8038 90.4153
2013 94.9245 92.8961 92.3529 90.9251 91.6496 90.1639
2012 94.7625 92.9180 93.1329 91.1314 92.1818 90.2353
2011 95.0535 93.9081 93.9891 90.8234 92.6788 90.2570
2010 94.6859 94.8439 94.7064 90.5036 93.4801 91.5250
2009 96.1971 95.7805 95.8926 93.1447 94.6287 92.1970
2008 98.2598 97.6158 97.6580 94.5519 96.4911 94.1762

Taxpayer Not Using the Composite Method
2007 98.4640 98.4640 98.4640 95.9642 97.8837 95.6063
2006 98.4640 98.4640 98.4640 97.3555 98.4640 97.0517
Years before 2006 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

12

Taxpayer Using the Composite Method
Years before 2008 98.4640 98.4640 98.4640 96.7357 97.9777 96.5363

Table 4 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For the Taxable Year Preceding the First Taxable Year Beginning After December 31, 2017
Long-Tail Lines of Business
Accident
Year
Private
Passenger
Auto
Liability/
Medical
Products
Liability -
Claims-Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2017 95.4241 85.1518 87.1543 87.4184 92.3564
2016 95.0203 85.6347 88.5453 85.8424 91.2748
2015 94.9784 87.5083 89.3276 84.6991 90.9788
2014 94.5984 82.9398 90.7045 83.1346 89.7633
2013 93.9009 84.2812 89.3185 82.5478 88.1393
2012 93.9524 85.6749 89.3669 81.9913 88.0168
2011 94.2025 87.1293 90.3357 82.3684 87.9945
2010 94.7658 88.4262 91.3398 83.2518 88.5587
2009 95.3902 89.7489 91.7494 83.8871 89.8408
2008 97.5924 91.0980 94.0873 85.8606 91.6956

Taxpayer Not Using the Composite Method
2007 98.4640 92.4736 95.5247 87.1320 93.0752
2006 98.4640 93.8753 96.9877 88.4289 94.4760
2005 98.4640 95.3017 98.4640 89.7517 95.8902
2004 98.4640 96.7473 98.4640 91.1009 97.2894
2003 98.4640 98.1839 98.4640 92.4766 98.4640
2002 98.4640 98.4640 98.4640 93.8785 98.4640
2001 98.4640 98.4640 98.4640 95.3051 98.4640
2000 98.4640 98.4640 98.4640 96.7511 98.4640
1999 98.4640 98.4640 98.4640 98.1886 98.4640
Years before 1999 98.4640 98.4640 98.4640 98.4640 98.4640

Taxpayer Using the Composite Method
Years before 2008 98.464 94.4219 96.4942 90.7644 94.8105

SECTION 5. APPLICATION OF DISCOUNT FACTORS IN SUBSEQUENT YEARS
Unless revised discount factors have been published, any taxpayer using

13

discount factors prescribed herein to compute discounted unpaid losses under § 846 in
the first taxable year beginning after December 31, 2017, must use the discount factors
prescribed in Tables 5 and 6 in subsequent taxable years for purposes of determining
the unpaid losses and expenses unpaid (as defined in § 832(b)(5) and (6)) attributable
to accident year 2018, the unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2))
attributable to accident year 2018, and salvage recoverable attributable to accident year
2018.

Table 5 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business
Taxable
Year
Beginning in
Auto Physical
Damage Fidelity/Surety
Financial
Guaranty/
Mortgage
Guaranty International Other*

2018 98.2924 95.7528 95.5027 96.0825 96.9295
2019 96.9631 96.9631 96.9631 96.9631 96.9631

Taxpayer Not Using Composite Method
Years after 2019 98.4640 98.4640 98.4640 98.4640 98.4640

Composite Discount Factors
2020 98.4640 98.4640 98.4640 98.4640 98.4640
Years after 2020 Use composite discount factors published for the relevant accident year.**

* For Accident and Health lines of business (other than disability income or credit disability insurance), the
discount factor for taxable year 2018 is 98.4640 percent. For later years, the discount factor for losses
incurred in 2018 is the discount factor published for Accident and Health lines of business for losses
incurred in the accident year coinciding with the taxable year.
**The relevant accident year is the accident year that is two years prior to the specified taxable year.

14

Table 5 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Short-Tail Lines of Business
Taxable
Year
Beginning in
Reinsurance -
Nonproportional
Assumed
Financial Lines
Reinsurance -
Nonproportional

Assumed
Liability
Reinsurance -
Nonproportional

Assumed
Property
Special
Property
(Fire,
Allied
Lines,
Inland
Marine,
Earthquake,
Burglary &
Theft) Warranty
Short-Tail
Composite

2018 95.3460 94.5342 96.0638 97.3657 98.0866 96.8171
2019 96.9631 96.9631 96.9631 96.9631 96.9631 96.9631

Taxpayer Not Using Composite Method
Years after 2019 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

Composite Discount Factors
2020 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640
Years after 2020 Use composite discount factors published for the relevant accident year.**

**The relevant accident year is the accident year that is two years prior to the specified taxable year.

Table 6 (part A)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business
Taxable
Year
Beginning in
Commercial
Auto/Truck
Liability/Medica
l
Medical
Professiona
l
Liability -
Claims-
Made
Medical
Professiona
l
Liability -
Occurrence
Multipl
e Peril
Lines
Other
Liabilit
y -
Claims-
Made
Other
Liability -
Occurrenc
e

2018 93.7136 91.1847 86.1703 95.0382 90.3833 88.7841
2019 94.4581 92.2226 88.3371 93.3147 91.2289 89.6647
2020 95.0089 92.4524 89.9455 93.6251 91.7605 90.2415
2021 95.0495 92.7481 91.3552 92.8232 91.8038 90.4153
2022 94.9245 92.8961 92.3529 90.9251 91.6496 90.1639
2023 94.7625 92.9180 93.1329 91.1314 92.1818 90.2353
2024 95.0535 93.9081 93.9891 90.8234 92.6788 90.2570
2025 94.6859 94.8439 94.7064 90.5036 93.4801 91.5250

15

2026 96.1971 95.7805 95.8926 93.1447 94.6287 92.1970
2027 98.2598 97.6158 97.6580 94.5519 96.4911 94.1762

Taxpayer Not Using Composite Method
2028 98.4640 98.4640 98.4640 95.9642 97.8837 95.6063
2029 98.4640 98.4640 98.4640 97.3555 98.4640 97.0517
Years after
2029 98.4640 98.4640 98.4640 98.4640 98.4640 98.4640

Composite Discount Factors
2028 98.4640 98.4640 98.4640 96.7357 97.9777 96.5363
Years after
2028 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year.

Table 6 (part B)
Factors for Discounting Unpaid Losses Under Section 846 (percent)
For Losses Incurred in Accident Year 2018 in Long-Tail Lines of Business
Taxable
Year
Beginning in
Private
Passenger
Auto Liability/
Medical
Products
Liability -
Claims-Made
Products
Liability -
Occurrence
Workers'
Compensation
Long-Tail
Composite

2018 95.4241 85.1518 87.1543 87.4184 92.3564
2019 95.0203 85.6347 88.5453 85.8424 91.2748
2020 94.9784 87.5083 89.3276 84.6991 90.9788
2021 94.5984 82.9398 90.7045 83.1346 89.7633
2022 93.9009 84.2812 89.3185 82.5478 88.1393
2023 93.9524 85.6749 89.3669 81.9913 88.0168
2024 94.2025 87.1293 90.3357 82.3684 87.9945
2025 94.7658 88.4262 91.3398 83.2518 88.5587
2026 95.3902 89.7489 91.7494 83.8871 89.8408
2027 97.5924 91.0980 94.0873 85.8606 91.6956

Taxpayer Not Using Composite Method
2028 98.4640 92.4736 95.5247 87.1320 93.0752
2029 98.4640 93.8753 96.9877 88.4289 94.4760
2030 98.4640 95.3017 98.4640 89.7517 95.8902
2031 98.4640 96.7473 98.4640 91.1009 97.2894
2032 98.4640 98.1839 98.4640 92.4766 98.4640
2033 98.4640 98.4640 98.4640 93.8785 98.4640
2034 98.4640 98.4640 98.4640 95.3051 98.4640
2035 98.4640 98.4640 98.4640 96.7511 98.4640

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2036 98.4640 98.4640 98.4640 98.1886 98.4640
Years after 2036 98.4640 98.4640 98.4640 98.4640 98.4640

Composite Discount Factors
2028 98.464 94.4219 96.4942 90.7644 94.8105
Years after 2028 Use composite discount factors published for the relevant accident year.*

*The relevant accident year is the accident year that is ten years prior to the specified taxable year.

SECTION 6. REVISED DISCOUNT FACTORS
.01 If revised unpaid loss discount factors for the 2018 accident year are
published after final regulations are published in the Federal Register, the Treasury
Department and IRS propose to issue guidance providing that taxpayers must use, for
taxable years ending on or after the date the final regulations are published, the revised
discount factors for purposes of determining, for all accident years ending with or before
calendar year 2018, the unpaid losses and expenses unpaid (as defined in § 832(b)(5)
and (6)) and the unpaid losses (as defined in §§ 805(a)(1) and 807(c)(2)).
.02 The Treasury Department and IRS propose that such guidance would
instruct any taxpayer that used the discount factors prescribed in this revenue
procedure in a taxable year beginning after December 31, 2017, and that does not
amend the return filed for such taxable year to use the revised discount factors, to take
into account the difference between the amount of the TCJA adjustment determined
using the unpaid loss discount factors prescribed in this revenue procedure and the
amount of the TCJA adjustment determined using the revised unpaid loss discount
factors. The difference would be taken into account ratably over the taxable years
remaining in the TCJA period of adjustment, beginning with the first taxable year in
which the taxpayer uses the revised discount factors.

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.03 Such guidance would also instruct any taxpayer that used the discount
factors prescribed in this revenue procedure in a taxable year beginning after December
31, 2017, and that does not amend the return filed for such taxable year to use the
revised discount factors, to compute, with respect to the last taxable year in which the
discount factors prescribed in this revenue procedure were used, the adjustment to the
amount of the discounted unpaid losses under § 846 at the end of that taxable year and
the amount of discounted estimated salvage recoverable under § 832 at the end of that
taxable year due to computing those amounts using the revised discount factors rather
than the discount factors prescribed in this revenue procedure. The adjustment would
be computed as follows: (1) from discounted unpaid losses computed using the
discount factors prescribed in this revenue procedure subtract discounted unpaid losses
computed using the revised discount factors, and (2) to the result so obtained, add
estimated salvage computed using the revised discount factors and subtract estimated
salvage computed using the discount factors prescribed in this revenue procedure. A
positive adjustment would be taken into account as an addition to gross income, and a
negative adjustment would be taken into account as a reduction to gross income. The
adjustment would be taken into account either (1) in the first taxable year in which the
taxpayer uses the revised discount factors, or (2) ratably over the taxable years
remaining in the TCJA period of adjustment, beginning with the first taxable year in
which the taxpayer uses the revised discount factors. For the first taxable year in which
a taxpayer uses the revised discount factors, the taxpayer would determine each of the
following as if the revised discount factors had applied in the preceding taxable year:

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(1) the unpaid losses and expenses unpaid (as defined in § 832(b)(5) and (6)) at the
end of the preceding taxable year, (2) the unpaid losses (as defined in §§ 805(a)(1) and
807(c)(2)) at the end of the preceding taxable year, and (3) the estimated salvage
recoverable under § 832 at the end of the preceding taxable year.
SECTION 7. REQUEST FOR COMMENTS
The Treasury Department and IRS request comments on the proposed guidance
described in section 6 of this revenue procedure. Comments should be submitted in
writing on or before February 6, 2019, and should contain a reference to this Rev. Proc.
2019-06. All comments will be available for public inspection and copying. Comments
may be submitted in one of three ways:
(1) By mail to Internal Revenue Service, CC:PA:LPD:PR (Rev. Proc. 2019-
06), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC
20044.
(2) Electronically to Notice.Comments@irscounsel.treas.gov
. Please include
“Rev. Proc. 2019-06” in both the body of the comment and on the subject
line of any electronic communications. Alternatively, taxpayers may
submit comments electronically via the Federal eRulemaking Portal at
www.regulations.gov (type IRS-2018-0043 in the search field on the
regulations.gov homepage to find this notice and submit comments).
(3) By hand-delivery Monday through Friday between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (Rev. Proc. 2019-06), Courier’s Desk, Internal
Revenue Service, 1111 Constitution Ave., NW, Washington, DC 20224.

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SECTION 8. DRAFTING INFORMATION
The principal author of this revenue procedure is Kathryn M. Sneade of the Office
of Associate Chief Counsel (Financial Institutions & Products). For further information
regarding this revenue procedure contact Ms. Sneade at (202) 317-6995 (not a toll free
call).