Net Income

amandaconkliamandaconkli
in Odomirok.26-Taxes

For Tax basis income, do we calculate the net income with the same formula just with an adjustment to earned premium (rev offset) and losses are discounted? I know we also will only count 25% of tax exempt bonds into investment income. On the formula sheet it gives Tax basis income = TBEP+InvIncome-TBIL. I just wanted to confirm as problem 2013 Fall Q18 removes expenses and PH dividends from this formula as well, that we calculate it the same way just with those three adjustments (EP w rev offset, Losses are discounted, tax exempt bonds only contribute 25% to investment income), but continue with normal calculations to get net income otherwise. When I first did the problem, I did not remove expenses and PH dividends because I followed the formula on the cheat sheet on the go.

Comments

  • Staff - ACStaff - AC

    The Odomirok Tax chapter does not mention underwriting expenses and the wiki formula follows the discourse of this chapter. In fact, as you say, regular and tax-based income are calculated the same way, except for these adjustments, i.e. net of expenses and PH dividends.

  • amandaconkliamandaconkli

    Thanks!

  • Staff - ACStaff - AC

    Sure, good luck.

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