IRS Counsel’s Memorandum Challenges Deductibility of Ceding Commission for Indemnity Reinsurance Transaction

6 January 2015
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Key takeaways

  • A recently released IRS counsel’s memorandum concluded that the taxpayer was required to amortize the ceding commission it paid pursuant to an indemnity reinsurance transaction that was part of a larger acquisition, instead of claiming a current deduction.
  • The counsel’s position is surprising and appears inconsistent with statutory authority.