Insurance Company Tax
Insurance Tax Services
An insurance company's tax return does not look like a normal corporate return and treating it like one is how firms miss things.
Loss reserve discounting, deferred acquisition cost capitalization, and the statutory-to-tax adjustments layered onto an already complex financial statement are specific to this industry and nowhere else. These concepts are not things a generalist tax preparer are likely to be familiar with. We built this practice around insurance tax specifically, not as an extension of corporate tax work.
Company Types We Work With
Property and casualty carriers, including personal and commercial lines.
Life and health carriers, including the reserve and reinsurance issues that carry into the tax return.
Reinsurers and reinsurance intermediaries, including the tax treatment of assumed and ceded arrangements.
Managing general agents and program administrators.
Risk retention groups and captives. See our Captive Insurance page for additional information on tax services for captive insurers.
Issues We Solve
Federal form determination. Whether a carrier files Form 1120-L or Form 1120-PC is not always obvious for a company writing mixed lines, and getting it wrong has consequences well past the filing itself.
Loss reserve discounting. The tax code requires discounting loss reserves using IRS-prescribed factors, and the gap between the statutory reserve and the tax-basis reserve is one of the largest, most recurring book-to-tax adjustments on an insurance return.
Deferred acquisition cost capitalization. Section 848 requires capitalizing and amortizing a specified percentage of net premium as a proxy for acquisition costs, regardless of how the company actually expensed them for statutory or GAAP purposes.
Statutory tax provision support. The provision that goes into the annual statement follows its own guidance, separate from the GAAP tax provision an entity may also need for a parent, a lender, or an investor.
Consolidated return complications. Insurance entities inside a group with non-insurance members follow different consolidation and loss rules than the rest of the group, and applying the wrong ones creates exposure that surfaces later, usually at the worst time.
Services We Offer
Federal income tax return preparation on Form 1120-L or Form 1120-PC, including the necessary statutory to tax adjustments specific to each.
Statutory income tax provision support for the annual statement.
GAAP tax provision support for entities that require it.
Multi-state nexus and allocation analysis for carriers expanding into new states.
Transaction tax support for acquisitions, reinsurance transactions, and restructurings involving insurance entities.
IRS examination representation
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