2020 Loss Reserve Discounting Factors Released

The Internal Revenue Service (“IRS”) issued Rev. Proc. 2020-48 on November 4, 2020, which contains the new discount factors for the 2020 tax year. These factors were determined using the applicable interest rate for 2020 under code section 846(c) of 3.08%, compounded semiannually, and the payment patterns for the 2017 determination year per code section 846(d).

Linked below is a table that summarizes the new factors to use for computing discounted unpaid losses and estimated salvage and subrogation as prescribed for the 2020 tax year.

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