New Developments for Life/Nonlife Consolidated Returns and the Disproportionate Asset Acquisition Rules

The Internal Revenue Service (IRS) recently issued three private letter rulings (PLRs) dealing with the application of the disproportionate asset acquisition rules under the life/nonlife regulations. As described in detail in this article, the PLRs reach conclusions generally favorable to the filing of life/nonlife consolidated returns and address certain issues not specifically addressed in the regulations. For example, the PLRs shed some light on what types of transactions might give rise to special acquisitions and, specifically, how the amount of premiums or reserves attributable to special acquisitions should be measured with respect to reinsurance contracts that are later modified in the ordinary course of business.