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SSAP 101 Adopted

Statutory Accounting Principles Working Group Adopts SSAP 101 Income Taxes, A Replacement of SSAP No. 10R and SSAP No. 10. 

On August 31, 2011 the Statutory Accounting Principles Working Group adopted SSAP 101. As adopted this replacement of SSAP 10R and SSAP 10 is effective as of January 1, 2012. The major changes from SSAP 10R are as follows: 

1. The second part of the three part test now determines admissibility of deferred taxes under this test based on a table which determines DTA admissibility based on a company’s Authorized Control Level RBC; 

Realization Threshold Limitation Table – RBC Reporting Entities


EXDTA ACL RBC (%)	11.b.i.	11.b.ii.
Greater than 300%	3 years	15%
200-300%	1 year	10%
Less than 200%	0 years	0%



2.  A tax loss contingency model replaces the FIN 48 type language in the original draft of SSAP 101. This is accomplished in conjunction with SSAP No. 5R – Liabilities, Contingencies and Impairments of Assets - Revised; 
   • The new standard for tax loss contingencies changes SSAP 5R by replacing the word “probable” as used in SSAP No. 5R with “more likely than not” for federal and foreign income tax contingencies;
   • A presumption that the reporting entity will be examined by relevant taxing authority and that the relevant taxing authority has full knowledge of all relevant information;
   • If the estimated tax loss contingency is greater than 50% of the tax benefit originally recognized the tax loss contingency recorded shall be equal to 100% of the original tax benefit recognized;
3. The language regarding tax planning strategies is relatively consistent with prior exposure drafts with one exception. To the extent that any tax loss contingencies are created by the tax planning strategies those must be accounted for; 
4. Disclosures are modified by the new SSAP as follows: 
   • A disclosure is now required for a tax loss contingency for which it is reasonably possible that the total liability will significantly increase within 12 months of the reporting date; 
   • Tax planning strategies related to reinsurance that impact the determination of adjusted gross DTAs and of admitted DTAs must be disclosed. 

For additional information about SSAP 101, Income Taxes, a Replacement of SSAP 10R and SSAP 10 please contact Doug Youngren at dyoungren@BlackmanKallick.com  or 312-980-2944, Jeff Dertz at jdertz@BlackmanKallick.com or 312-980-3224, Jerry Hufton  at jhufton@BlackmanKallick.com or 312-980-2961, or your Blackman Kallick representative.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.