The amount of a firm's annual deduction would be determined by the severity of its liability insurance problem. Firms that are unable to obtain $1 million of liability insurance coverage at a premium cost not exceeding 2 percent of annual gross receipts would be permitted to deduct the lesser of 5 percent of the current year's gross receipts from services or $100,000. This deduction would be permitted until the firm accumulated a fund equal to 15 percent of its average annual gross receipts from services (based on a five-year moving average). All other firms would be permitted to deduct the lesser of 2 percent of the current year's gross receipts from services or $25,000 until the firm accumulated a fund equal to 10 percent of its average gross receipts from services (based on a fiveyear moving average). The following table may help you determine your annual deduction.. Insurance Premium for $1 Million of Coverage Firms with Non-Severe Product Liability Insurance Problem |