nonliquidating liquidations

  • Nonliquidating liquidations permit a parent life insurance company to liquidate a life insurance subsidiary on a tax-free basis, while preserving the subsidiary’s valuable insurance charter and licenses within the corporate shell. The value of the charter and licenses can then be realized through sale of the shell. One consequence of a tax-free liquidation is the carryover of corporate tax attributes including, for life insurance companies, reserves and the balance in the shareholders and policyholders surplus account. See also Shell insurance companies.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).