Mississippi Administrative Code
Title 35 - Department of Revenue
Part 3 - Income and Franchise
Subpart 10 - Other Entities and Miscellaneous
Chapter 03 - Insurance Companies
Section 35-3-10-03-102 - OPERATING EXPENSE

1. Insurance companies should compute their deductions for operating expenses in a manner consistent with the computations of such deductions as shown by the annual statement filed with the Commissioner of Insurance, provided that, adjustments must be made for deductions not allowable under the statute and, provided further that, accruals will be allowed only if income is reported on the accrual basis. Returns, with supporting schedules where necessary, must be reconcilable with the annual statement.

2. The method used in the annual statement in computing home office rent and furniture and equipment expense should be followed on the return. Companies having unrecovered costs in furniture and equipment, because of their departure from the annual statement in prior years, may continue charging depreciation on such items until cost has been recovered.

3. In the case of income determined by direct accounting, when an expense which is specific to Mississippi has been claimed as a direct deduction from Mississippi income, the corresponding expense for all other jurisdictions must be excluded from expenses to be apportioned. When a particular type of income is not reportable to this state because it is beyond its taxing jurisdiction, no expense incurred in earning such income shall be deducted on the return.

4. Companies reporting a part of their investment income to this state must separately apportion non-allocable expenses of the investment department by using the ratio of Mississippi investment income to company-wide investment income. A supplement should be attached to the return for this purpose.

5. Life companies and accident and health companies shall apportion to this state a part of allowable, non-allocable expenses by using the ratio between Mississippi gross premiums and annuity considerations reported and company-wide gross premiums and annuity considerations. "Gross premiums" shall mean direct writing, less return premiums, plus reinsurance assumed. The Commissioner will allow modifications of this formula when it can be shown that greater accuracy will be achieved thereby. Companies having both life and accident and health business must separately apportion expenses of each department. A supplement should be attached to the return for this purpose.

6. The following provisions of this regulation are applicable only to non-life companies determining their Mississippi income by the direct accounting method: