Announcement 2020-4

The Department of the Treasury and the Internal Revenue Service (IRS) an­ nounce that public hearings conducted by the IRS on notices of proposed rulemak­ ing related to the internal revenue laws will be held telephonically until further notice, and encourage taxpayers to submit public comments electronically.

Conducting Public Hearings Telephonically

Until further notice, all public hearings on notices of proposed rulemaking will be conducted by telephone. Individuals who want to testify at a public hearing still must request to testify, submit timely public com­ ments, and submit outlines of topics they intend to cover in their testimony. Deadlines for timely submission can be found in no­ tices of proposed rulemaking. Speakers still will have up to ten minutes to testify and may be asked questions by the panel.

Additionally, individuals who want to testify (by telephone) at a public hearing must send an email to publichearings@irs. gov to receive the telephone number and ac­ cess code for the hearing. The subject line of the email must contain the regulation num­ ber (REG-XXXXXX-XX) for the hearing and the word TESTIFY. For example, the subject line may say: Request to TESTIFY at Hearing for REG-123456-00. The email should also include a copy of the speaker’s public comments and outline of topics. The email must be received by the deadline, as identified in the notice of proposed rulemak­ ing, to submit an outline of topics.

Individuals who want to attend (by tele­ phone) a public hearing must also send an email to publichearings@irs.gov to receive the telephone number and access code for the hearing. The subject line of the email must contain the regulation number (REGXXXXXX-XX) and the word ATTEND. For example, the subject line may say: Request to ATTEND Hearing for REG123456-00. The email requesting to attend

the public hearing must be received by 5:00 P.M. two (2) business days before the date that the hearing is scheduled.

Any questions regarding speaking at or attending a public hearing may also be emailed to publichearings@irs.gov.

The telephonic hearings will be made accessible to people with disabilities. To request special assistance during the tele­ phonic hearing please contact the Publica­ tions and Regulations Branch of the Office of Associate Chief Counsel (Procedure and Administration) by sending an email to publichearings@irs.gov (preferred) or by telephone at (202) 317-5177 (not a toll-free number) at least three (3) days prior to the date that the telephonic hearing is scheduled.

Submission of Public Comments through Regulations.gov

Commenters are strongly encouraged to submit public comments via the Federal eRulemaking Portal at www.regulations. gov. The IRS expects to have limited per­ sonnel available to process public com­ ments that are submitted on paper through mail. Until further notice, any comments submitted on paper will be considered to the extent practicable.

CONTACT INFORMATION

The principal author of this notice is Em­ ily M. Lesniak of the Office of the Associate Chief Counsel (Procedure and Administra­ tion). For further information regarding this notice, contact Emily M. Lesniak at (202) 317-3400 (not a toll-free number).

Notice of Proposed Rulemaking

Computation and Reporting of Reserves for Life Insurance Companies

REG-132529-17

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains proposed regulations that provide guid­ ance on the computation of life insur­ ance reserves and the change in basis of computing certain reserves of insurance companies. These proposed regulations implement recent legislative changes to the Internal Revenue Code. This docu­ ment invites comments on these proposed regulations. This document affects entities taxable as insurance companies.

DATES: Written or electronic comments and requests for a public hearing must be received by June 1, 2020.

ADDRESSES: Submit electronic submis­ sions via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-132529-17) by following the online instructions for submitting comments. Once submitted to the Federal eRulemak­ ing Portal, comments cannot be edited or withdrawn. The Department of the Trea­ sury (Treasury Department) and the IRS will publish for public availability any comment received to its public docket, whether submitted electronically or in hard copy. Send hard copy submissions to: CC:PA:LPD:PR (REG-132529-17), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CON­ TACT: Concerning the proposed regu­ lations, Dan Phillips, (202) 317-6995; concerning submissions of comments and requests for a public hearing, Regina Johnson, (202) 317-5177 or fdms.data­ base@irscounsel.treas.gov (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed amendments to 26 CFR part 1 under sec­ tions 807 and 816 of the Internal Revenue Code (Code). Sections 807 and 816 were added to the Code by section 211(a) of the Deficit Reduction Act of 1984, Public

Bulletin No. 2020–17 667 April 20, 2020

Law 98-369, 98 Stat. 494. Section 807 was amended by sections 13513 and 13517 of the Tax Cuts and Jobs Act, Public Law 115-97, 131 Stat. 2054, 2143, 2144 (2017) (TCJA). These amendments by the TCJA apply to taxable years beginning after De­ cember 31, 2017.

This document also proposes to amend or remove the following regulations in 26 CFR: §§1.338-11, 1.381(c)(22)-1, 1.801-2, 1.801-5, 1.801-7, 1.801-8, 1.8064, 1.807-1, 1.809-2, 1.809-5, 1.810-3, 1.817A-0, 1.817A-1, 1.818-2, 1.818-4, 1.848-1, 1.6012-2, and 301.9100-6T. These proposed changes are conforming changes to regulations that (i) relate to re­ pealed or amended law, (ii) reference reg­ ulations that are proposed to be removed, (iii) have no future application, or (iv) re­ late to other regulations proposed by this document.

A. Reserves Taken into Account in Determining Life Insurance Company Taxable Income

Section 801(a) imposes a tax on the life insurance company taxable income of every life insurance company. Section 801(b) defines life insurance company taxable income to mean life insurance gross income, reduced by life insurance deductions. Under section 803(a)(2), life insurance gross income includes a net de­ crease in items described in section 807(c) as required by section 807(a). Under sec­ tions 804 and 805(a)(2), life insurance deductions include a deduction for a net increase in items as required by section 807(b). The items described in section 807(c) are: (i) life insurance reserves (as defined in section 816(b)); (ii) unearned premi­ ums and unpaid losses included in total reserves; (iii) amounts that are discounted at the appropriate rate of interest to satisfy obligations under insurance and annuity contracts that do not involve life, accident, or health contingencies when the compu­ tation is made; (iv) dividend accumula­ tions and other amounts held at interest in connection with insurance and annuity contracts; (v) premiums received in ad­ vance and liabilities for premium deposit funds; and (vi) reasonable special contin­ gency reserves under contracts of group term life insurance or group accident and

health insurance that are held for retired lives, premium stabilization, or a combi­ nation of both.

B. Life Insurance Reserves Taken into Account in Determining Premiums Earned for a Nonlife Insurance Company

Section 831(a) generally imposes a tax on the taxable income of every insur­ ance company other than a life insurance company (a nonlife insurance company). Section 832 defines taxable income for this purpose to be gross income (as de­ fined in section 832(b)(1)) less allowed deductions. Section 832(b)(1) provides that gross income includes underwriting income, and section 832(b)(3) provides that underwriting income means premi­ ums earned on insurance contracts during the taxable year less losses incurred and expenses incurred.

Under sections 832(b)(4) and 832(b) (7)(A), premiums earned on insurance contracts during the taxable year are re­ duced by life insurance reserves at the end of the taxable year and increased by life insurance reserves at the end of the preceding taxable year. For this pur­ pose, life insurance reserves are defined in section 816(b) but determined under section 807(d).

C. Method of Computing Life Insurance Reserves for Purposes of Determining Income

1. Prior to modification by the TCJA

Section 807(d) sets forth rules for com­ puting the amount of life insurance reserves for a contract for purposes of determining life insurance company taxable income and for purposes of computing premiums earned for a nonlife insurance company. Prior to amendment by the TCJA, section 807(d)(1) provided that the amount of the life insurance reserves for any contract was the greater of the net surrender value of the contract (determined under section 807(e) (1)) or the federally prescribed reserve determined under section 807(d)(2). This amount, however, could not exceed the amount that would have been taken into account with respect to the contract in de­ termining statutory reserves (as defined in prior section 807(d)(6)).

Prior section 807(d)(2) provided that the federally prescribed reserve for a con­ tract was computed using (i) the tax re­ serve method applicable to the contract, (ii) the greater of the applicable Federal interest rate or the prevailing state as­ sumed interest rate, and (iii) the prevailing commissioners’ standard tables for mor­ tality and morbidity, adjusted as appro­ priate to reflect the risks (such as substan­ dard risks) incurred under the contract that were not otherwise taken into account.

In the case of a contract to which the Commissioners’ Reserve Valuation Meth­ od (CRVM) applied (generally, a life in­ surance contract), prior sections 807(d) (3)(A)(i) and 807(d)(3)(B)(i) provided that the tax reserve method applicable to the contract was the CRVM as prescribed by the National Association of Insurance Commissioners (NAIC) that was in effect on the date the contract was issued. Sim­ ilarly, in the case of a contract to which the Commissioners’ Annuity Reserve Val­ uation Method (CARVM) applied (gener­ ally, an annuity contract), prior sections 807(d)(3)(A)(ii) and 807(d)(3)(B)(ii) pro­ vided that the tax reserve method appli­ cable to the contract was the CARVM as prescribed by the NAIC that was in effect on the date the contract was issued. Other parameters, such as the appropriate inter­ est rate and mortality tables, were likewise generally determined with reference to the date the contract was issued.

Section 1.807-1 provided instructions on what mortality and morbidity tables taxpayers should have used to compute life insurance reserves for a contract for which there were no applicable commis­ sioners’ standard tables when the contract was issued. Section 1.807-1 was pub­ lished as a final regulation in the Federal Register (54 FR 52933) on December 26, 1989 (T.D. 8278).

2. Principle-based reserves and IRS notices

In recent years, the NAIC has pro­ mulgated and states have adopted prin­ ciple-based reserving methods to better reflect the economics of more complex life insurance and annuity products. Prin­ ciple-based reserves (PBR) are intended to replace a more formulaic approach to determining policy reserves with an ap­

April 20, 2020 668 Bulletin No. 2020–17

proach that takes into account a range of future economic conditions and more closely reflects the risks of complex insur­ ance products. See, e.g., Principle-Based Reserves for Life Products under the NAIC Valuation Manual, Actuarial Stan­ dard of Practice No. 52, Actuarial Stan­ dards Board, Sept. 2017, App 1.

Federal income tax issues arose when trying to apply the requirements of prior section 807(d) to tax reserve methods that were PBR methods. It was not clear how aspects of PBR methods fit within the stat­ utory requirements of prior section 807(d). For example, a PBR method may require reserves to be computed based on many different scenarios in which many differ­ ent interest rate assumptions are made, but prior section 807(d) required the use of a single interest rate when computing the reserve for a contract.

In 2008, the IRS issued Notice 2008-18, 2008-1 C.B. 363, to alert life insurance com­ panies that Federal tax issues might arise as a result of the then-proposed PBR methods, identify areas of concern, and invite com­ ments on these and other issues. Several comments were received and considered.

In 2010, the IRS issued Notice 201029, 2010-15 I.R.B. 547, to provide inter­ im guidance to issuers of variable annuity contracts as a result of the adoption by the NAIC of Actuarial Guideline 43 (AG 43), which describes a PBR method. The interim guidance provided, among other things, that (i) for purposes of determining whether an insurance company satisfies the 50 percent of reserves test for quali­ fication as a life insurance company un­ der section 816(a), the Standard Scenario Amount (SSA) determined under AG 43 is included in life insurance reserves as defined in section 816(b) and total re­ serves as defined in section 816(c), (ii) for purposes of applying the statutory reserve cap of section 807(d)(1), the term “statu­ tory reserves” under prior section 807(d) (6) (current section 807(d)(4)) includes the SSA, provided the requirements of prior section 807(d)(6) are otherwise met, and (iii) for purposes of determining the amount of the reserve under prior section 807(d)(2) for contracts falling within the scope of AG 43 and issued on or after De­ cember 31, 2009, the provisions for deter­ mining the SSA are taken into account and the provisions for determining the condi­

tional tail expectation amount (a compo­ nent of AG 43) are not taken into account.

3. Modification by the TCJA

Section 13517 of the TCJA amend­ ed section 807(d)(1) to provide general­ ly that, for purposes of determining life insurance company taxable income, the amount of the life insurance reserves for any contract (other than a contract to which section 807(d)(1)(B) applies (relat­ ing to variable contracts)), is the greater of the net surrender value of such contract or 92.81 percent of the reserve determined under section 807(d)(2). The amount of the life insurance reserve for a variable contract, as specified in amended section 807(d)(1)(B), is the sum of (i) the greater of the net surrender value of such contract or the portion of the reserve that is sepa­ rately accounted for under section 817 and (ii) 92.81 percent of the excess (if any) of the reserve determined under section 807(d)(2) over the amount in clause (i). Section 13517 of the TCJA amended prior section 807(d)(2) to provide that the amount of the reserve under section 807(d)(2) is determined using the tax re­ serve method applicable to such contract. Section 13517 of the TCJA also amended prior section 807(d)(3) to provide general­ ly that the tax reserve method applicable to a contract is the method prescribed by the NAIC that applies to the contract as of the date the reserve is determined, not the date the contract was issued, as was required prior to the TCJA.

The TCJA did not change the treatment of asset adequacy reserves. Asset adequa­ cy reserves and similar reserves that ad­ dress solvency concerns of state regulators but do not meet technical actuarial re­ quirements have long been excluded from life insurance reserves for Federal income tax purposes. See, e.g., Rev. Rul. 67-435, 1967-2C.B. 232; Old Line Insurance Co. v. Commissioner, 13 B.T.A. 758 (1928). The Conference Report to the TCJA states that “[a]s under present law, no deduction for asset adequacy reserves or deficiency reserves is allowed.” H.R. Rep. No. 115466, at 477 (2017) (Conference Report). See also Staff of the Joint Committee on Taxation, 115th Cong., General Explana­ tion of Public Law 115-97, 235 (Comm. Print 2018) (Bluebook).

Section 13517(c)(3) of the TCJA pro­ vided a transition rule that requires any difference between (i) the amount of life insurance reserves with respect to any contract as of the close of the taxable year preceding the first taxable year beginning after December 31, 2017, computed using the method prescribed by the TCJA and (ii) the amount of such reserves computed using the method prior to the amendments by the TCJA, to be taken into account over the eight succeeding taxable years. Rev. Proc. 2019-34, 2019-35 I.R.B. 669, provides simplified procedures for an in­ surance company to obtain consent of the Commissioner of Internal Revenue or his delegate (Commissioner) to change its method of accounting for life insurance reserves to comply with the amendments to section 807 made by the TCJA.

D. Change in Basis of Computing Reserves

1. Prior to modification by the TCJA

a. Statutory provisions

Prior to amendment by the TCJA, sec­ tion 807(f)(1) provided that if the basis for determining any item described in sec­ tion 807(c) (for example, life insurance reserves) as of the close of any taxable year differed from the basis for that deter­ mination as of the close of the preceding taxable year, then so much of the differ­ ence between the amount of the items at the close of the taxable year computed on the new basis and the amount of the item at the close of the taxable year computed on the old basis, as is attributable to con­ tracts issued before the taxable year, was taken into account ratably for each of the succeeding ten taxable years.

Prior section 807(f) was substantial­ ly similar to and replaced prior section 810(d) as enacted by the Life Insurance Company Income Tax Act of 1959, Public Law 86-69, 73 Stat. 112 (1959). By en­ acting prior section 810(d), Congress pro­ vided a specific treatment for adjustments resulting from a change in method of com­ puting reserves that otherwise would have been subject to the general tax rules un­ der section 481 for changes in method of accounting. See, e.g., American General Life and Accident Insurance Co. v. United

Bulletin No. 2020–17 669 April 20, 2020

amended return); Rev. Rul. 94-74, 1994-2 C.B. 157 (applying prior section 807(f) in several situations in which taxpayer changed the basis of computing life insur­ ance reserves); Rev. Rul. 80-117, 1980-1 C.B. 143 (revocation of the election to re­ compute life insurance reserves under pri­ or section 818(c) of a company acquired in a merger results in a recomputation of the reserves, which is a change in basis of computing the reserves subject to the 10 year spread of prior section 810(d)); Rev. Rul. 80-116, 1980-1 C.B. 141 (recomputa­ tion of life insurance reserves under prior section 818(c) of a company acquired in a merger is not a change in basis of com­ puting reserves under prior section 810(d) because reserves must be recomputed for both beginning and end of year); Rev. Rul. 78-354, 1978-2 C.B. 190 (election of a life insurance company to recompute life insurance reserves under prior section 818(c) is terminated when company fails to qualify as a life insurance company and the required recomputation of the re­ serves is a change in basis of computing the reserves subject to the 10 year spread of prior section 810(d); method of nonlife insurance company taking 10 year spread into account is shown); Rev. Rul. 77-198, 1977-1 C.B. 190 (recomputation of cer­ tain reserves from a nonactuarial method to a method utilizing recognized mortality tables and assumed rates of interest is a change in basis of computing reserves un­ der prior sections 806(b) and 810(d)); Rev. Rul. 75-308, 1975-2 C.B. 264 (change in basis of computing reserves under prior section 810(d) occurs when the addition to the reserve is made, not when the com­ pany adopts the policy to change the basis of computing reserves); Rev. Rul. 74-57, 1974-1 C.B. 163 (life insurance company that changes basis of computing reserves must take into account the entire adjust­ ment under prior section 810(d) in the year of change if it ceases to qualify as a life in­ surance company in the year after the year of change); Rev. Rul. 70-568, 1970-2 C.B. 140 (recomputation of reserves under prior section 818(c) applies to contracts at beginning of year even if they are not held at end of year; prior section 810(d) does not apply to the recomputation); Rev. Rul. 70-192, 1970-1 C.B. 153 (change in assumption of when in year death bene­ fits would be paid is a change in basis of

States, 90-1 USTC (CCH) ¶ 50,010 (M.D. Tenn.1989) (section 481 is a more general provision dealing with a broad variety of cases and section 810, on the other hand, is much more specific and deals with a very narrow and limited type of change in method of accounting).

If a company ceases to qualify as a life insurance company, section 807(f)(2), which was not amended by the TCJA, requires, except as provided in section 381(c)(22), that the balance of any ad­ justment under section 807(f) be taken into account in the taxable year preced­ ing the taxable year in which the taxpay­ er no longer qualifies as a life insurance company.

b. Regulatory provisions

Regulations relating to the change in method of computing reserves were ad­ opted under Code provisions that existed prior to their repeal by the Deficit Reduc­ tion Act of 1984. If and to the extent the Deficit Reduction Act of 1984 incorpo­ rated provisions of prior law, regulations and other guidance generally continued to serve as interpretive guides to the new provisions. H.R. Rep. No. 98-432, pt. 2, at 1401 (1984). Section 1.801-5(c) provides that if reserves are claimed by a life insurance company then sufficient information must be filed with the return to enable the val­ idation of the claim. Section 1.801-5(c) also requires certain information to be filed if the basis (for Federal income tax purposes) for determining the amount of the life insurance reserves as of the close of the taxable year differs from the basis for such determination as of the beginning of the taxable year. Section 1.801-5 was published as a final regulation in the Fed- eral Register (25 FR 12654) on Decem­ ber 10, 1960 (T.D. 6513).

Section 1.806-4 describes prior sec­ tion 806(b) and provides that a change in basis of computing any of the items in prior section 810(c) (the predecessor to section 807(c)) is not a change in method of accounting requiring the consent of the Secretary of the Treasury or his delegate (Secretary) under section 446(e). Section 1.806-4 was published as a final regulation in the Federal Register (25 FR 12654) on December 10, 1960 (T.D. 6513).

Section 1.810-3 describes how a change in basis of computing the items in prior section 810(c) should have been treated under the Code prior to its amend­ ment by the Deficit Reduction Act of 1984. Section 1.810-3(a) provides that if the basis for determining an item in pri­ or section 810(c) at the end of a taxable year differs from the basis for such deter­ mination at the end of the preceding tax­ able year, then the difference between the amount of the item computed at the end of the taxable year on the new basis and the amount of the item computed at the end of the taxable year on the old basis is generally taken into account ratably over the 10 succeeding taxable years. Example 1 of §1.810-3(b) illustrates that if there is a change in basis of computing an item described in former section 810(c) during a taxable year, then for purposes of deter­ mining any increase or decrease in such item during the taxable year, such increase or decrease is the difference between the amount of such item computed at the be­ ginning of the taxable year on the old ba­ sis and the amount of such item computed at the end of the taxable year on the old basis. Section 1.810-3(c) further provides that, subject to section 381(c)(22), if a company ceases to qualify as a life insur­ ance company, the balance of any adjust­ ment resulting from the change in method of computing reserves must be taken into account in the taxable year preceding the taxable year in which the taxpayer no lon­ ger qualifies as a life insurance company. Section 1.810-3 was published as a final regulation in the Federal Register (25 FR 12654) on December 10, 1960 (T.D. 6513). Section 1.818-2(c) describes prior sec­ tions 806(b) and 810(d)(1). Section 1.8182 was published as a final regulation in the Federal Register (26 FR 2781) on April 4, 1961 (T.D. 6558).

c. IRS guidance

The application of section 807(f) prior to its amendment by the TCJA and the ap­ plication of prior section 810(d) are illus­ trated by Rev. Rul. 2002-6, 2002-1 C.B. 460 (inclusion of factors omitted in a pre­ vious year’s determination of reserves is a change in basis under prior section 807(f) and taxpayer may correct the method on an

April 20, 2020 670 Bulletin No. 2020–17

computing reserves under prior sections 806(b) and 810 (d)); Rev. Rul. 69-444, 1969-2 C.B. 145 (an increase in life in­ surance reserves attributable solely to the addition of a new benefit on existing con­ tracts is not a change in basis of comput­ ing reserves under prior sections 806(b) and 810(d)); Rev. Rul. 65-240, 1965-2 C.B. 236 (a nonlife company’s change in basis of computing life insurance reserves is a change in basis of computing reserves under prior section 810(d) and is subject to the 10 year spread); Rev. Rul. 65-233, 1965-2 C.B. 228 (prior sections 806(b) and 810(d) apply in the year of a change in basis of computing reserves notwith­ standing that state regulatory approval for change was not received until the follow­ ing year); and Rev. Rul. 65-143, 1965-1 C.B. 261 (change in method of computing life insurance reserves from a preliminary term basis to a net level premium basis is a change in basis of computing reserves under prior sections 806(b) and 810(d); election under prior section 818(c) does not apply to life insurance contracts that are computed for statutory purposes on a net level premium basis at the end of the year of election).

d. Nonlife insurance companies

Section 832(b)(4) requires a nonlife insurance company to include life insur­ ance reserves, as defined in section 816(b) and determined under section 807, in its determination of premiums earned on in­ surance contracts during the taxable year, which is a component of underwriting income. Section 807(f) provides rules for changing the basis for determining any item referred to in section 807(c), and life insurance reserves are referred to in section 807(c)(1). Nonlife insurance com­ panies are required to follow the require­ ments in section 807(f) to change the basis of computing life insurance reserves. Rev. Rul. 65-240.

2. Modification by the TCJA

Section 13513 of the TCJA amended prior section 807(f) to provide that any difference between the amount of an item referred to in section 807(c) as of the close of the taxable year computed on a new ba­ sis and the amount of such item as of the

close of the taxable year computed on the old basis, as is attributable to contracts is­ sued before the taxable year, is to be taken into account under section 481 as adjust­ ments attributable to a change in method of accounting initiated by the taxpayer and made with the consent of the Secretary.

Section 811(a), which was not amend­ ed by the TCJA, generally provides that computations made for the determination of Federal income taxes imposed by the provisions of subchapter L of chapter 1 of the Code (subchapter L) that are set forth in part I shall be made under an ac­ crual method of accounting or, to the ex­ tent permitted under regulations, under a combination of an accrual method and any other permitted method. To the extent not inconsistent with the preceding sen­ tence or any other provision in part I of subchapter L, these computations are to be made in a manner consistent with the manner required for the annual statement approved by the NAIC. Section 811(a) does not affect the application of section 446(e), which generally requires a taxpay­ er to secure the consent of the Secretary before changing the method of computing the taxpayer’s taxable income. See also §1.446-1(e).

After the amendment of section 807(f) by the TCJA, a life insurance company must follow the regular administrative procedures for a change in method of ac­ counting for a change in basis of comput­ ing reserves referred to in section 807(c). See, e.g., §1.446-1(e); Rev. Proc. 2015-13, 2015-5 I.R.B. 419, Rev. Proc. 2019-43, 2019-48 I.R.B. 1107; Rev. Proc. 200218, 2002-1 C.B. 678. Similarly, a nonlife insurance company must follow the ad­ ministrative procedures for a change in method of accounting to change its basis of computing life insurance reserves (as defined in section 816(b)).

The Conference Report explained that under the amended law “[i]ncome or loss

[sic] resulting from a change in method of computing life insurance company re­ serves is taken into account consistent with IRS procedures, generally ratably over a four-year period, instead of over a 10-year period.” Conference Report at 467. The Joint Committee on Taxation explained that a company that makes a change in method of computing life in­ surance company reserves is required to

report and file such statements and oth­ er information as the Secretary requires under the IRS procedures for accounting method changes, including the procedures for obtaining automatic consent to change an accounting method. Bluebook at 228.