Accounting Standard Updates

12 Days of SSAP: INT 18-03: Additional Elements Under the Tax Cuts and Jobs Act

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As the holidays approach, JLK Rosenberger is taking a new perspective on a holiday classic – the Twelve Days of Christmas. Rather than filling your head with turtle doves and gold rings, we are going to instead focus on the latest changes to SSAP and how they will impact your insurance company in 2019 and beyond.

On the first day of SSAP JLK Rosenberger told to me –INT 18-03: Additional Elements Under the Tax Cuts and Jobs Act

INT 18-03 provides reporting guidance for three issues related to impact from the Tax Cuts and Jobs Act (TCJA) signed into law in 2017. The guidance relates to reporting Repatriation Transitional Tax (RTT), Alternative Minimum Tax (AMT) credit and Global Intangible Low-taxed Income (GILTI).

While RTT and GILTI deal with foreign income and may not affect domestic insurers, the guidance on AMT will likely affect most companies.

The TCJA eliminated the AMT.  Companies can realize 100% of its AMT receivables to offset regular tax obligations through 2021. If the AMT credit carryforward is not used to reduce regular taxes, 50% can be recovered as a refund to the extent not used in 2018 – 2020, with 100% refund by 2021.

GAAP and STAT guidance permit reporting AMT credits as a current-year recoverable or a deferred tax asset (DTA). If reported under a DTA under STAT, the AMT credits would be subject to admissibility.