rr-05-58.pdf

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Part 1

Section 809.-- Reduction in Certain Deductions of Mutual Life Insurance Companies

26 CFR 1.809-9: Computation of the differential earnings rate and the recomputed differential
earnings rate.

Rev. Rul. 2005-58

This revenue ruling contains a determination under ' 809 of the Internal Revenue Code
of the "differential earnings rate" for 2004. This rate is used by mutual life insurance companies
to calculate their federal income tax liability for taxable years beginning in 2004. Notice 2005-
18, 2005-9 I.R.B. 634, contained a tentative determination of this rate.
The Job Creation and Worker Assistance Act of 2002, Pub. L. 107-147, § 611, amended
§ 809 by adding new paragraph (j). Section § 809(j) provides that the differential earnings rate
shall be treated as zero for purposes of computing both the differential earnings amount and the
recomputed differential earnings amount for a mutual life insurance company’s taxable years
beginning in 2001, 2002, or 2003. See
Notice 2002-33, 2002-1 C.B. 989. Under § 809(j), the
final recomputed differential earnings rate for 2003 is zero. Subsequently, the Pension Funding

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Equity Act of 2004, Pub. L. 108-218, § 205, repealed § 809 of the Code for taxable years
beginning after December 31, 2004. Therefore, the Internal Revenue Service is required to
determine a differential earnings rate for 2004.
The final determination of the rates is set forth in Table 1.

Rev. Rul. 2005-58 Table 1

Determination of Rates To Be Used For Taxable Years Beginning in 2004

Differential earnings rate for 2004 .............. 0

Recomputed differential earnings rate for 2003 0*

Imputed earnings rate for 2004 .................... 4.449

Base period stock earnings rate ................... 18.221

Current stock earnings rate for 2004 ............ 4.913

Stock earnings rate for 2001 ...................... 2.354

Stock earnings rate for 2002 .................... -1.876

Stock earnings rate for 2003 .................... 14.261

Average mutual earnings rate for 2002 ...... 5.570

* See § 809(j).

For additional background concerning the differential earnings rates, see

Rev. Rul. 2001-33, 2001-2 C.B. 118.

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DRAFTING INFORMATION

The principal author of this revenue ruling is Katherine A. Hossofsky of the Office of the
Associate Chief Counsel (Financial Institutions and Products). For further information regarding
this revenue ruling, contact Ms. Hossofsky on (202) 622-8435 (not a toll-free call).