SEC. 4. APPLICATION

.01 The following tables present separately for each line of business the discount factors under § 832 for the 1997 accident year. All the discount factors presented in this section were determined using the applicable interest rate under

§ 846(c) for 1997, which is 6.33 percent, and by assuming all estimated salvage is recovered in the middle of each calendar year. The discount factors for the 1997 accident year have been adjusted to take into account changes in the groupings of the lines of business on the annual statement. In addition, see Rev. Proc. 98–11, page 9, for an explanation of the treatment of the multiple peril lines.

.02 These tables must be used by taxpayers irrespective of whether they elected to discount unpaid losses using their own historical experience under § 846.

.03 Tables.

Accident and Health (Other Than Disability Income or Credit Disability Insurance)

The discount factor for all years equals 96.9777 percent.

Auto Physical Damage

Discount Tax Year Factors (%)

AY+ 0 95.5498 AY+ 1 94.0911 AY+ 2 96.9777

January 26, 1998 18 1998–4 I.R.B.

The discount factor for AY+3 and subsequent years equals 96.9777 percent.

Commercial Auto/Truck Liability/ Medical

Discount Tax Year Factors (%)

AY+ 0 88.0553 AY+ 1 87.1995 AY+ 2 88.9446 AY+ 3 88.2138 AY+ 4 88.0377 AY+ 5 90.4504 AY+ 6 85.6730 AY+ 7 91.3816 AY+ 8 89.7918 AY+ 9 92.4220 AY+10 95.0477 AY+11 96.9777

The discount factor for AY+12 and subsequent years equals 96.9777 percent.

Composite Discount Factors

Discount Tax Year Factors (%)

AY+ 0 85.5529 AY+ 1 83.9261 AY+ 2 83.4985 AY+ 3 83.3876 AY+ 4 84.1370 AY+ 5 84.7213 AY+ 6 84.7741 AY+ 7 84.8647 AY+ 8 87.7469 AY+ 9 90.3325 AY+10 92.9868 AY+11 95.6242 AY+12 96.9777

The discount factor for AY+13 and subsequent years equals 96.9777 percent.

Fidelity/Surety

Discount Tax Year Factors (%)

AY+ 0 92.7512 AY+ 1 94.0911 AY+ 2 96.9777

The discount factor for AY+3 and subsequent years equals 96.9777 percent.

Financial Guaranty/Mortgage Guaranty

Discount Tax Year Factors (%)

AY+ 0 94.6118 AY+ 1 94.0911 AY+ 2 96.9777

The discount factor for AY+3 and subsequent years equals 96.9777 percent.

International (Composite)

Discount Tax Year Factors (%)

AY+ 0 85.5529 AY+ 1 83.9261 AY+ 2 83.4985 AY+ 3 83.3876 AY+ 4 84.1370 AY+ 5 84.7213 AY+ 6 84.7741 AY+ 7 84.8647 AY+ 8 87.7469 AY+ 9 90.3325 AY+10 92.9868 AY+11 95.6242 AY+12 96.9777

The discount factor for AY+13 and subsequent years equals 96.9777 percent.

Medical Malpractice — Claims-Made

Discount Tax Year Factors (%)

AY+ 0 69.7444 AY+ 1 72.4408 AY+ 2 70.9597 AY+ 3 70.2975 AY+ 4 73.8865 AY+ 5 72.2143 AY+ 6 82.0526 AY+ 7 91.3471 AY+ 8 96.2732 AY+ 9 96.9777

The discount factor for AY+10 and subsequent years equals 96.9777 percent.

Medical Malpractice — Occurrence

Discount Tax Year Factors (%)

AY+ 0 63.4849 AY+ 1 66.8754 AY+ 2 71.4631 AY+ 3 75.2927 AY+ 4 72.0433 AY+ 5 78.1594 AY+ 6 83.1757 AY+ 7 86.3387 AY+ 8 90.8773 AY+ 9 93.5843 AY+10 96.3144 AY+11 96.9777

The discount factor for AY+12 and subsequent years equals 96.9777 percent.

Miscellaneous Casualty

Discount Tax Year Factors (%)

AY+ 0 94.9505 AY+ 1 94.0911 AY+ 2 96.9777

The discount factor for AY+3 and subsequent years equals 96.9777 percent.

Multiple Peril Lines (Homeowners/ Farmowners Multiple Peril, Commer- cial Multiple Peril, and Special Liabil- ity (Ocean Marine, Aircraft (All Per- ils), Boiler and Machinery))

Discount Tax Year Factors (%)

AY+ 0 88.1442 AY+ 1 87.0828 AY+ 2 87.8621 AY+ 3 87.5115 AY+ 4 88.6539 AY+ 5 90.1258 AY+ 6 90.1198 AY+ 7 89.0542 AY+ 8 91.5003 AY+ 9 94.2350 AY+10 96.9777

1998–4 I.R.B 19 January 26, 1998

The discount factor for AY+11 and subsequent years equals 96.9777 percent.

Other (Including Credit)

Discount Tax Year Factors (%)

AY+ 0 96.0160 AY+ 1 94.0911 AY+ 2 96.9777

The discount factor for AY+3 and subsequent years equals 96.9777 percent.

Other Liability — Claims-Made

Discount Tax Year Factors (%)

AY+ 0 77.1913 AY+ 1 82.7511 AY+ 2 81.7452 AY+ 3 79.3754 AY+ 4 82.4055 AY+ 5 87.1445 AY+ 6 85.6308 AY+ 7 91.3857 AY+ 8 93.5459 AY+ 9 96.2673 AY+10 96.9777

The discount factor for AY+11 and subsequent years equals 96.9777 percent.

Other Liability — Occurrence

Discount Tax Year Factors (%)

AY+ 0 78.1808 AY+ 1 78.9149 AY+ 2 81.3348 AY+ 3 83.3371 AY+ 4 84.6107 AY+ 5 82.1372 AY+ 6 86.2972 AY+ 7 88.2925 AY+ 8 92.4786 AY+ 9 95.1025 AY+10 96.9777

The discount factor for AY+11 and subsequent years equals 96.9777 percent.

Private PassengerAuto Liability/Medical

Discount Tax Year Factors (%)

AY+ 0 91.4258 AY+ 1 90.8687 AY+ 2 89.9218 AY+ 3 89.5302 AY+ 4 89.0574 AY+ 5 89.5204 AY+ 6 88.2913 AY+ 7 89.0287 AY+ 8 89.7296 AY+ 9 92.3587 AY+10 94.9871 AY+11 96.9777

The discount factor for AY+12 and subsequent years equals 96.9777 percent.

Products Liability — Claims-Made

Discount Tax Year Factors (%)

AY+ 0 78.6232 AY+ 1 80.6940 AY+ 2 85.2594 AY+ 3 85.1672 AY+ 4 80.6815 AY+ 5 87.8085 AY+ 6 80.3554 AY+ 7 87.9607 AY+ 8 96.6992 AY+ 9 96.9777

The discount factor for AY+10 and subsequent years equals 96.9777 percent.

Products Liability — Occurrence

Discount Tax Year Factors (%)

AY+ 0 75.1149 AY+ 1 77.7623 AY+ 2 76.1078 AY+ 3 77.4296 AY+ 4 79.2166 AY+ 5 78.5502 AY+ 6 79.9464 AY+ 7 71.9235 AY+ 8 77.4789

AY+ 9 79.9620 AY+10 82.6312 AY+11 85.5373 AY+12 88.7650 AY+13 92.4698 AY+14 96.9777

The discount factor for AY+15 and subsequent years equals 96.9777 percent.

Reinsurance A (Nonproportional Property)

Discount Tax Year Factors (%)

AY+ 0 86.2624 AY+ 1 89.5106 AY+ 2 92.2926 AY+ 3 91.6380 AY+ 4 78.5001 AY+ 5 94.6795 AY+ 6 93.2638 AY+ 7 95.9330 AY+ 8 96.9777

The discount factor for AY+9 and subsequent years equals 96.9777 percent.

Reinsurance B (Nonproportional Liability)

Discount Tax Year Factors (%)

AY+ 0 74.1864 AY+ 1 76.4932 AY+ 2 77.2282 AY+ 3 76.6129 AY+ 4 79.1554 AY+ 5 74.1193 AY+ 6 75.9021 AY+ 7 83.5464 AY+ 8 86.0047 AY+ 9 88.5652 AY+10 91.2350 AY+11 94.0259 AY+12 96.9777

The discount factor for AY+13 and subsequent years equals 96.9777 percent.

January 26, 1998 20 1998–4 I.R.B.

shall be treated and taxed for income tax purposes as part of such estate (and not as a separate trust) for all taxable years of the estate ending after the date of the decedent’s death and before the applicable date, as defined in § 646(b)(2).

Section 646(b)(1) provides that the term “qualified revocable trust” means any trust (or portion thereof) that was treated under § 676 as owned by the decedent by reason of a power in the decedent to revoke (determined without regard to § 672(e)).

Section 646(b)(2) provides that the term “applicable date” means—(A) if no estate tax return is required to be filed, the date that is 2 years after the date of the decedent’s death, and (B) if an estate tax return is required to be filed, the date that is 6 months after the date of the final determination of the estate tax liability.

Section 646(c) provides that the election under § 646(a) shall be made not later than the time prescribed for filing the income tax return for the first taxable year of the estate (determined with regard to extensions), and once made, shall be irrevocable.