Rev. Rul. 70-245

A title insurance company, reporting its income under the accrual method of accounting, receives premiums from the issuance of its policies of title insurance. The policies of insurance so issued run for an indefinite length of time. A fixed and final premium is charged and collected for the policy when issued.

Held, the provisions of section 832(b)(4) of the Internal Revenue Code of 1954 with respect to the division of premiums received by insurance companies into earned and unearned premiums are not applicable to title insurance companies whose premiums are earned in full at the time their services are rendered. All earnings of the company in this case must be reported as income for the year in which the charge for its services is made. Compare Revenue Ruling 57-48, C.B. 1957-1, 212; and Revenue Ruling 59-251, C.B. 1959-2, 167, where state statute or regulation required an "unearned premium reserve" by title insurance companies.

I.T. 1981, C.B. III-1, 311 (1924), is hereby superseded, since the position stated therein is set forth under the current statute and regulations in this Revenue Ruling.

¹ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.