SEC. 3. TABLES OF DISCOUNT

FACTORS

.01 The following tables present separately for each line of business the discount factors under § 846 for accident year 1995. All the discount factors presented in this section were determined using the applicable interest rate under § 846(c) for 1995, which is 6.99 percent, and by assuming all loss payments occur in the middle of the calendar year.

.02 If the groupings of individual lines of business on the annual statement changes, taxpayers must discount the unpaid losses on the resulting lines of business in accordance with the discounting patterns that would have applied to those unpaid losses based on their classification on the 1990 annual statement.

.03 Tables

join in any consolidated returns filed by the new group by notifying the new group and the former member in writing.

(2) The Service will make any such determination within 6 months after receiving any notification described in section 4.03(4) above. If the Service requests any information it deems necessary to make that determination, the running of this period will be suspended until the information is received. If the Service does not notify the new group and the former member within the 6-month period, the former member may not join in any consolidated returns filed by the new group during the 60-month period. A separate 6-month period will apply to each notification described in section 4.03(4) above.

.05 Effect of Discontinuing .

(1) The members of an electing consolidated group are subject to all the consequences that apply when a group discontinues filing consolidated returns. See, e.g., § 1.1502–19(c) as contained in the 26 CFR part 1 edition revised as of April 1, 1995 (inclusion of excess loss account with respect to stock of another member).

(2) Each member of an electing consolidated group will be treated as having ceased to be a member of the group on the last day of the taxable year immediately preceding the first taxable year that begins on or after July 12, 1995. See §§ 1.1502–13 and 1.1502–32 as contained in the 26 CFR part 1 edition revised as of April 1, 1995. (3) The electing consolidated group must file a return for the taxable year immediately preceding the first taxable

402 1995–2 C.B.

year that begins on or after July 12, 1995. This return must be captioned ‘‘Final Consolidated Return of a Group that Discontinued Filing Consolidated Returns Pursuant to Rev. Proc. 95–39.’’ The former common parent is the agent for purposes of filing this return. See § 1.1502–77(a).

.06 Discretion to Make Appropriate Adjustments .

If the information or representations provided in any closing agreement (or supplemental closing agreement) is incorrect or if a former member or common parent fails to comply with the closing agreement (or supplemental closing agreement), the Service may revoke the permission to discontinue filing consolidated returns granted pursuant to this revenue procedure at any time or make such other adjustments as may be appropriate. Any revocation may, in the sole discretion of the Service, be effective beginning with the first taxable year that begins on or after July 12, 1995 ( i.e., the first taxable year for which permission to discontinue was granted).

.07 Affiliation .

Except as provided in section 5.02 above for purposes of applying the consolidated return regulations, the determination of whether any former member is a member of an affiliated group within the meaning of § 1504 is not affected by this revenue procedure.