TaxNewsFlash-United States

January 22, 2008
No. 2008-38
    
 

Final Regulations Under Sections 197 and 338 Concerning Deemed Sale or Acquisition of Insurance Company’s Assets

The Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9377) under section 197, relating to the basis of intangibles acquired in an assumption reinsurance transaction, and under section 338, relating to reserve increases after a deemed asset sale and to the effect of such a deemed asset sale on section 846(e) elections.

Today’s final regulations adopt “without substantive change” regulations that were issued in proposed and temporary form in 2006; and correct two “obvious errors” in related final regulations also issued in 2006.

For a computer-scanned version of today’s regulations (19 pages): T.D. 9377

Background

In April 2006, final regulations addressed the deemed sale or acquisition of an insurance company’s assets under a section 338 election; the sale or acquisition of an insurance trade or business subject to section 1060; and the acquisition of insurance contracts through assumption reinsurance. Accompanying temporary and proposed regulations also provided rules under:

  • Section 197 relating to the determination of adjusted basis of amortizable section 197 intangibles with respect to insurance contracts
  • Section 338 relating to increases in reserves after a deemed asset sale
  • Sections 338 and 846 relating to the effect of a section 338 election on a section 846(e) election

Today’s regulations make no substantive changes to the temporary and proposed regulations because no comments were received following their issuance.

T.D. 9377 will be published in the Federal Register on Wednesday, January 23, 2008.
 

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