Tax Deductibility of Unpaid Employee Welfare Benefit Claims

Sponsored By Mahoney & Associates

Topics:

Budgeting & Planning

Employee Benefits & Human Capital

Finance & Risk Management

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Abstract:

The rules governing the deductibility of Incurred But Not Reported Claims (IBNR) in an employee welfare benefit program are complex. This complexity has led benefits and accounting professionals of every stripe to offer differing interpretations to clients and employers. The purpose of this White Paper is to clarify those rules and the circumstances under which employers may claim a deduction. The Paper addresses such key points as: An overview of the applicable sections of the Internal Revenue Code of 1986 (Code; A discussion of the tax issues including the applicability of cash versus accrual accounting methods; Judicial interpretation of the “All Events” test before and after the advent of “Economic Performance”; The inescapable grip of the General Dynamics decision; Revenue Procedure 2008-52 (which appears to contradict in part the General Dynamics decision); The authors’ conclusions about...

DETAILS

Sponsored by: Mahoney & Associates

Released: June 23, 2009

Length: 14 pages

Format: PDF (108 kb)

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