February 2018


IRS Priority Guidance Plan – Initial Implementation of Tax Cuts and Jobs Act

On February 7, the IRS released an updated 2017-2018 Priority Guidance Plan. The plan reflects projects that the IRS hopes to complete during the twelve-month period from July 1, 2017 through June 30, 2018.

The updated plan includes an initial set of eighteen priorities related to implementation of the Tax Cuts and Jobs Act (TCJA). A priority of particular interest to the life insurance industry is guidance under §§101 and 1016 and new §6050Y regarding reportable policy sales of life insurance contracts. As we reported previously, the TCJA included provisions that eliminate the exclusions to the transfer for value rules under IRC Section 101(a)(2) if a “Reportable Policy Sale” has occurred.

We expect the IRS will provide further guidance in interpreting the statutory definition of the term, which appears to be very broadly defined. Additionally, Reportable Policy Sales are subject to numerous information reporting requirements that apply to the buyer, the seller, and the insurance underwriter.

The updated Priority Guidance Plan also includes guidance under §162(m) regarding the application of the effective date provisions to the elimination of the exceptions for commissions and performance-based compensation from the definition of compensation subject to the deduction limit.



BB&T v. MassMutual – Case Voluntarily Dismissed

On February 7, BB&T and MassMutual voluntarily dismissed, with prejudice, the ongoing litigation with respect to losses BB&T incurred on the carrying value of its separate account BOLI policies issued by MassMutual. The dispute originally commenced in May 2009, after BB&T’s BOLI policies incurred significant investment losses due to an underlying allocation to a fixed income hedge fund.

According to the Stipulation of Dismissal, each party will bear its own costs and attorneys’ fees. In January, the Court granted a temporary stay in the case because the parties indicated that they had reached a settlement. The terms of any such settlement do not appear to be publicly available.

Case Citation: North Carolina Superior Court (Forsyth County) 15 CVS 2638



MB Schoen Publication – Tax Reform Analysis: Economic Impact on BOLI

On February 16, we published a report summarizing our initial economic analysis of tax reform’s likely impact on BOLI programs. The report focused on the economic impact attributable to changes in the corporate tax rates.