ABATax Comment Concerning IRS Notice 2001-10

Section of Taxation
Submission to the Federal Executive Branch

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Comments Concerning IRS Notice 2001–10
April 2001

III.  Standardized SDA Table to Value Economic Benefits

We commend the Treasury and the IRS for replacing outdated P.S. 58 rates. These rates, based on mortality experience from the 1940s, have been used rarely by taxpayers to report income from their Equity SDAs. Replacing P.S. 58 rates also should curb the use of abusive reverse split-dollar arrangements described in the Notice.

We suggest that a uniform table or set of tables ("SDA Table") serve as the exclusive method for valuing death benefit coverage. This approach would simplify tax administration and facilitate timely and accurate reporting by taxpayers. A uniform SDA table would also alleviate burdens placed on insurance companies that issue policies subject to SDAs and eliminate valuation controversies arising under some current practices.

We would like to work with the Treasury and IRS to develop accurate and realistic SDA Tables. The Notice raises a number of excellent questions regarding the development of SDA Tables that are worthy of further consideration. We would like to offer our observations regarding the development of SDA Tables at this time.

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