SOFE SOFA-CFE Exam - Topic 3 Question 69 Discussion

Actual exam question for SOFE's SOFA-CFE exam

Question #: 69
Topic #: 3

Which insurance arrangement, which involved insurance of a loss that had previously occurred, similarly was found not to be insurance for federal income tax purposes?

Aannual statement

Bretroactive

Creserved

DTax reserves

Show Suggested Answer

Suggested Answer: D

by Mariann at Apr 19, 2023, 08:24 AM

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Lynna

8 months ago

I’m not convinced, seems like it should count as insurance.

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Carline

8 months ago

Surprised to learn retroactive isn't treated as insurance!

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Renay

9 months ago

Wait, I thought tax reserves were the answer?

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Amber

9 months ago

Totally agree, retroactive is not considered insurance.

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Van

9 months ago

It's B, retroactive insurance.

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Tran

9 months ago

I recall that retroactive insurance arrangements are tricky, but I’m not confident. Maybe it’s worth considering A or C too, just in case.

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Dell

9 months ago

I’m leaning towards B as well, but I’m a bit confused about the definitions. I wish I had reviewed those practice questions more thoroughly.

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Sherman

9 months ago

I'm not entirely sure, but I feel like it could also be D, Tax reserves. We went over some similar questions, and I remember something about reserves not being considered insurance.

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Elvis

9 months ago

I think the answer might be B, retroactive, because I remember it being discussed in class as not qualifying as insurance for tax purposes.

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Stacey

9 months ago

I'm a little confused by this question. I'm not sure I fully understand the concept of inactive classifications and why they would still show up in reports. I'll need to think this through carefully.

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Vincent

10 months ago

This looks like a tricky one. I'll need to think it through carefully.

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Adelina

1 year ago

Tax reserves? Now that's a new one. Is the IRS just making up insurance terms now? I'm sticking with B) retroactive, it's the only one that makes any sense.

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Naomi

1 year ago

Yeah, tax reserves are important for insurance companies to ensure they can cover future claims. Retroactive insurance does make the most sense in this context.

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Helaine

1 year ago

Yeah, I agree. Tax reserves and retroactive both seem like valid options in this case.

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Viola

1 year ago

I think retroactive makes sense too, it's like covering a loss that already happened.

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Ryan

1 year ago

I think you're right, retroactive insurance is when coverage is provided for a loss that has already occurred.

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Phillip

1 year ago

Tax reserves are actually a common term in insurance, it's used to cover future claims.

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Edna

1 year ago

Tax reserves are actually a common term in insurance, it's used to set aside funds for potential future claims.

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Velda

1 year ago

Annual statement, really? That's just basic accounting, not insurance. Gotta be B) retroactive, even if it sounds a bit sketchy.

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Brandee

1 year ago

I'm going with retroactive too, it just fits the description better.

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Samira

1 year ago

It does sound a bit sketchy, but I think retroactive makes the most sense.

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Art

1 year ago

Yeah, retroactive seems like the best option here.

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Rolf

1 year ago

I agree, annual statement doesn't sound like insurance at all.

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Cletus

1 year ago

Exactly, as long as it meets the criteria, it's considered insurance.

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Kanisha

1 year ago

True, it's all about how the arrangement is structured.

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Han

1 year ago

But it's still considered insurance for federal income tax purposes.

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Chauncey

1 year ago

I agree, retroactive insurance does sound a bit sketchy.

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Matthew

1 year ago

Hmm, this one's tricky. I'm gonna go with B) retroactive, seems like the only option that fits the description. Though I gotta say, the IRS must have a sense of humor to call that 'insurance'.

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