26 CFR 601.105: Examination of returns and claims for refund, credit or abatement;


determination of tax liability
(Also: 842(b))
Rev. Proc. 2020-41
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, 2018. 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, 2018. 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, 2017, see Rev. Proc. 2019-36, 2019-38
I.R.B. 729.
SECTION 2. PERCENTAGES AND YIELDS
.01 DOMESTIC ASSET/LIABILITY PERCENTAGES FOR 2019. 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, 2018, the relevant domestic asset/liability percentages
are:
124.8 percent for foreign life insurance companies, and
197.9 percent for foreign property and liability insurance companies.
.02 DOMESTIC INVESTMENT YIELDS FOR 2019. The Secretary prescribes 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, 2018, the relevant domestic investment yields are:
4.5 percent for foreign life insurance companies, and
3.4 percent for foreign property and liability insurance companies.
.03 SOURCE OF DATA FOR 2019. The section 842(b) percentages to be used for the
2019 tax year are based on tax return data following the same methodology used for
the 2018 year.
SECTION 3. ESTIMATED TAXES
To compute estimated tax and the installment payments of estimated tax due for
taxable years beginning after December 31, 2018, 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. 2019-
36 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 y

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