PART I—LIFE INSURANCE COMPANIES
Subpart A—Tax Imposed
§801. Tax imposed
(a) Tax imposed
(1) In general
A tax is hereby imposed for each taxable year on the life insurance company taxable income of every life insurance company. Such tax shall consist of a tax computed as provided in section 11 as though the life insurance company taxable income were the taxable income referred to in section 11.
(2) Alternative tax in case of capital gains
(A) In general
If a life insurance company has a net capital gain for the taxable year, then (in lieu of the tax imposed by paragraph (1)), there is hereby imposed a tax (if such tax is less than the tax imposed by paragraph (1)).
(B) Amount of tax
The amount of the tax imposed by this paragraph shall be the sum of—
(i) a partial tax, computed as provided by paragraph (1), on the life insurance company taxable income reduced by the amount of the net capital gain, and
(ii) an amount determined as provided in section 1201(a) on such net capital gain.
(C) Net capital gain not taken into account in determining small life insurance company deduction
For purposes of subparagraph (B)(i), the amount allowable as a deduction under paragraph (2) of section 804 shall be determined by reducing the tentative LICTI by the amount of the net capital gain (determined without regard to items attributable to noninsurance businesses).
(b) Life insurance company taxable income
For purposes of this part, the term "life insurance company taxable income" means—
(1) life insurance gross income, reduced by
(2) life insurance deductions.
(c) Taxation of distributions from pre-1984 policyholders surplus account
For provision taxing distributions to shareholders from pre-1984 policyholders surplus account, see section 815.
(Added
Prior Provisions
A prior section 801, added
Another prior section 801, acts Aug. 16, 1954, ch. 736,
A prior section 802, added
Another prior section 802, acts Aug. 16, 1954, ch. 736,
Amendments
1986—Subsec. (a)(2)(C).
Effective Date of 1986 Amendment
Amendment by
Effective Date
Treatment of Certain Workers' Compensation Funds
"(a)
"(b)
"(1) the group has received a certificate of approval from, and is subject to regulation by, the State board or agency that is responsible for administering the State workers' disability compensation laws,
"(2) each employer who is a member of the group, by written agreement, is jointly and severally bound to assume and discharge, by payment, any lawful judgment or award entered by a court of competent jurisdiction or by the State agency responsible for administering the State workers' disability compensation laws against a member of the group,
"(3) the group is prohibited by State law or regulation from using the monies collected for a purpose other than to pay, or to reserve against, claims under the State workers' disability compensation laws and expenses,
"(4) the group is prohibited by State law or regulation from taking projected investment income into account in determining members' premiums,
"(5) the group is required by State law or regulation to submit to the State board or agency that is responsible for administering the State workers' disability compensation laws an audited financial statement,
"(6) the group's investments are limited by State law or regulation to bonds, notes, or other evidences of indebtedness issued, assumed or guaranteed by the United States of America, or by an agency or instrumentality thereof, certificates of deposit in a federally insured bank, shares or savings deposits in a federally insured savings and loan association or credit union, and certificates of deposit issued by a commercial bank duly chartered under State law, and other investments which are approved by the State board or agency that is responsible for administering the State workers' disability compensation laws, and
"(7) the group exclusively covers workers' compensation liability, is not a commercial insurance carrier or company licensed by the State board, agency, or commissioner responsible for regulating and licensing insurance carriers and companies; and is not subject to filing under the regulatory statements of the National Association of Insurance Commissioners."
Treatment of Certain Market Discount Bonds
"(1)
"(2)
Waiver of Interest on Certain Underpayments of Tax
Scope of Section 255 of the Tax Equity and Fiscal Responsibility Act of 1982
Treatment of Certain Self-Insured Workers' Compensation Funds
"(1)
"(A) shall suspend any pending audit of any self-insured workers' compensation fund where the audit involves the issue of whether such fund is a mutual insurance company,
"(B) shall not initiate any audit of any such fund involving such issue, and
"(C) shall take no steps to collect from such fund any underpayment, interest, or penalty involving such issue.
"(2)
"(3)
"(4)
Reserves Computed on New Basis; Fresh Start
"(a)
"(1)
"(2)
"(3)
"(b)
"(1)
"(A) a company having its principal place of business in Alabama and incorporated in Delaware on November 29, 1979, or
"(B) a company having its principal place of business in Houston, Texas, and incorporated in Delaware on June 9, 1947.
"(2)
"(A)
"(B)
"(i)
"(I) the amount of the adjustments which would be taken into account under such section in taxable years beginning after 1983 without regard to this subparagraph, exceeds
"(II) the amount of any fresh start adjustment attributable to contracts for which there was such an increase in reserves as a result of such change.
"(ii)
"(I) the reserve attributable to such contract as of the close of the taxpayer's last taxable year beginning before January 1, 1984, over
"(II) the reserve for such contract as of the beginning of the taxpayer's first taxable year beginning after 1983 as recomputed under subsection (a) of this section.
"(C)
"(3)
"(A)
"(i) to any reserve transferred pursuant to—
"(I) a reinsurance agreement entered into after September 27, 1983, and before January 1, 1984, or
"(II) a modification of a reinsurance agreement made after September 27, 1983, and before January 1, 1984, and
"(ii) to any reserve strengthening reported for Federal income tax purposes after September 27, 1983, for a taxable year ending before January 1, 1984.
Clause (ii) shall not apply to the computation of reserves on any contract issued if such computation employs the reserve practice used for purposes of the most recent annual statement filed before September 27, 1983, for the type of contract with respect to which such reserves are set up. For purposes of this subparagraph, if the reinsurer's taxable year is not a calendar year, the first day of the reinsurer's first taxable year beginning after December 31, 1983, shall be substituted for 'January 1, 1984' each place it appears.
"(B)
"(C) 10-
"(D)
"(E)
"(4)
"(A)
"(B)
"(C)
"(i)
"(I) which made an election under such section 818(c
"(II) which was acquired in a qualified stock purchase (as defined in section 338(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) before December 31, 1983,
the fact that such corporation is treated as a new corporation under section 338 of such Code shall not result in the election described in subclause (I) not applying to such new corporation.
"(ii)
"(iii)
"(5)
"(i) if the amount of the reserves with respect to the recaptured contracts, computed at the date of recapture, that the reinsurer would have taken into account under section 810(c) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act) exceeds the amount of the reserves with respect to the recaptured contracts, computed at the date of recapture, taken into account by the reinsurer under section 807(c) of the Internal Revenue Code of 1986 (as amended by this subtitle), such excess (but not greater than the amount of such excess if computed on January 1, 1984) shall be taken into account by the reinsurer under the method described in section 807(f)(1)(B)(ii) of the Internal Revenue Code of 1986 (as amended by this subtitle) commencing with the taxable year of recapture, and
"(ii) the amount, if any, taken into account by the reinsurer under clause (i) for purposes of part I of subchapter L of
The excess described in clause (i) shall be reduced by any portion of such excess to which section 807(f) of the Internal Revenue Code of 1986 applies by reason of paragraph (3) of this subsection. For purposes of this paragraph, the term 'reinsurer' refers to the taxpayer that held reserves with respect to the recaptured contracts as of the end of the taxable year preceding the first taxable year beginning after December 31, 1983, and the term 'reinsured' refers to the taxpayer to which such reserves are ultimately transferred upon termination.
"(c)
"(1)
"(A) subsection (a) shall not apply to such company, and
"(B) as of the beginning of the first taxable year beginning after December 31, 1983, and thereafter, the reserve for any contract issued before the first day of such taxable year by such company shall be the statutory reserve for such contract (within the meaning of [former] section 809(b)(4)(B)(i) of the Internal Revenue Code of 1986).
"(2)
"(A)
"(i) a qualified life insurance company makes an election under paragraph (1), and
"(ii) the tentative LICTI (within the meaning of section 806(c) of such Code) of such company for its first taxable year beginning after December 31, 1983, does not exceed $3,000,000 (determined with regard to this paragraph),
such company may elect under this paragraph to have the reserve for any contract issued on or after the first day of such first taxable year and before January 1, 1989, be equal to the greater of the statutory reserve for such contract (adjusted as provided in subparagraph (B)) or the net surrender value of such contract (as defined in section 807(e)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]).
"(B)
"(i) the prevailing State assumed interest rate (within the meaning of section 807(c)(4) of such Code), for
"(ii) the adjusted reserves rate.
"(3)
"(4)
"(5)
"(A) shall be made at such time and in such manner as the Secretary of the Treasury may prescribe, and
"(B) once made, shall be irrevocable."
Treatment of Certain Companies Operating Both as Stock and Mutual Company
Treatment of Reinsurance Agreements Required by National Association of Insurance Commissioners
Reports to Congress on Revenue, Segment Balance, Etc.
"(a)
"(1) the aggregate amount of revenue received under part I of subchapter L of
"(2) a comparison between the amount of such revenue and the amount anticipated by reason of changes made by the Tax Equity and Fiscal Responsibility Act of 1982 [
"(3) the reasons for any difference between such aggregate revenues and anticipated revenues.
"(b)
"(1)
"(2)
"(A) an analysis of the portion of the taxes paid by mutual life insurance companies and stock life insurance companies, and
"(B) any other data considered relevant by either stock life insurance companies or mutual life insurance companies in determining appropriate segment balance, such as the respective amounts of the following items held by each segment of the industry—
"(i) equity,
"(ii) life insurance reserves,
"(iii) other types of reserves,
"(iv) dividends paid to policyholders and shareholders,
"(v) pension business,
"(vi) total assets, and
"(vii) gross receipts.
Such report shall also include an analysis of the extent to which taxes paid by stockholders of life insurance companies shall be included in analyzing segment balance.
"(3)
"(A)
"(B)
"(c)
Subpart B—Life Insurance Gross Income
§803. Life insurance gross income
(a) In general
For purposes of this part, the term "life insurance gross income" means the sum of the following amounts:
(1) Premiums
(A) The gross amount of premiums and other consideration on insurance and annuity contracts, less
(B) return premiums, and premiums and other consideration arising out of indemnity reinsurance.
(2) Decreases in certain reserves
Each net decrease in reserves which is required by section 807(a) to be taken into account under this paragraph.
(3) Other amounts
All amounts not includible under paragraph (1) or (2) which under this subtitle are includible in gross income.
(b) Special rules for premiums
(1) Certain items included
For purposes of subsection (a)(1)(A), the term "gross amount of premiums and other consideration" includes—
(A) advance premiums,
(B) deposits,
(C) fees,
(D) assessments,
(E) consideration in respect of assuming liabilities under contracts not issued by the taxpayer, and
(F) the amount of policyholder dividends reimbursable to the taxpayer by a reinsurer in respect of reinsured policies,
on insurance and annuity contracts.
(2) Policyholder dividends excluded from return premiums
For purposes of subsection (a)(1)(B)—
(A) In general
Except as provided in subparagraph (B), the term "return premiums" does not include any policyholder dividends.
(B) Exception for indemnity reinsurance
Subparagraph (A) shall not apply to amounts of premiums or other consideration returned to another life insurance company in respect of indemnity reinsurance.
(Added
Prior Provisions
A prior section 803, acts Aug. 16, 1954, ch. 736,
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Subpart C—Life Insurance Deductions
Amendments
2004—
1986—
§804. Life insurance deductions
For purposes of this part, the term "life insurance deductions" means—
(1) the general deductions provided in section 805, and
(2) the small life insurance company deduction (if any) determined under section 806(a).
(Added
Prior Provisions
A prior section 804, added
Another prior section 804, acts Aug. 16, 1954, ch. 736,
Amendments
1986—Pars. (2), (3).
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
§805. General deductions
(a) General rule
For purposes of this part, there shall be allowed the following deductions:
(1) Death benefits, etc.
All claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts.
(2) Increases in certain reserves
The net increase in reserves which is required by section 807(b) to be taken into account under this paragraph.
(3) Policyholder dividends
The deduction for policyholder dividends (determined under section 808(c)).
(4) Dividends received by company
(A) In general
The deductions provided by sections 243, 244, and 245 (as modified by subparagraph (B))—
(i) for 100 percent dividends received, and
(ii) for the life insurance company's share of the dividends (other than 100 percent dividends) received.
(B) Application of section 246(b)
In applying section 246(b) (relating to limitation on aggregate amount of deductions for dividends received) for purposes of subparagraph (A), the limit on the aggregate amount of the deductions allowed by sections 243(a)(1), 244(a), and 245 shall be the percentage determined under section 246(b)(3) of the life insurance company taxable income (and such limitation shall be applied as provided in section 246(b)(3)), computed without regard to—
(i) the small life insurance company deduction,
(ii) the operations loss deduction provided by section 810,
(iii) the deductions allowed by sections 243(a)(1), 244(a), and 245, and
(iv) any capital loss carryback to the taxable year under section 1212(a)(1),
but such limit shall not apply for any taxable year for which there is a loss from operations.
(C) 100 percent dividend
For purposes of subparagraph (A)—
(i) In general
Except as provided in clause (ii), the term "100 percent dividend" means any dividend if the percentage used for purposes of determining the deduction allowable under section 243, 244, or 245(b) is 100 percent.
(ii) Treatment of dividends from noninsurance companies
The term "100 percent dividend" does not include any distribution by a corporation which is not an insurance company to the extent such distribution is out of tax-exempt interest, or out of the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, or out of dividends which are not 100 percent dividends (determined with the application of this clause as if it applies to distributions by all corporations including insurance companies).
(D) Special rules for certain dividends from insurance companies
(i) In general
In the case of any 100 percent dividend paid to any life insurance company out of the earnings and profits for any taxable year beginning after December 31, 1983, of another life insurance company if—
(I) the paying company's share determined under section 812 for such taxable year, exceeds
(II) the receiving company's share determined under section 812 for its taxable year in which the dividend is received or accrued,
the deduction allowed under section 243, 244, or 245(b) (as the case may be) shall be reduced as provided in clause (ii).
(ii) Amount of reduction
The reduction under this clause for a dividend is an amount equal to—
(I) the portion of such dividend attributable to prorated amounts, multiplied by
(II) the percentage obtained by subtracting the share described in subclause (II) of clause (i) from the share described in subclause (I) of such clause.
(iii) Prorated amounts
For purposes of this subparagraph, the term "prorated amounts" means tax-exempt interest, the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, and dividends other than 100 percent dividends.
(iv) Portion of dividend attributable to prorated amounts
For purposes of this subparagraph, in determining the portion of any dividend attributable to prorated amounts—
(I) any dividend by the paying corporation shall be treated as paid first out of earnings and profits for taxable years beginning after December 31, 1983, attributable to prorated amounts (to the extent thereof), and
(II) by determining the portion of earnings and profits so attributable without any reduction for the tax imposed by this chapter.
(v) Subparagraph to apply to dividends from other insurance companies
Rules similar to the rules of this subsection shall apply in the case of 100 percent dividends paid by an insurance company which is not a life insurance company.
(E) Certain dividends received by foreign corporations
Subparagraph (A)(i) (and not subparagraph (A)(ii)) shall apply to any dividend received by a foreign corporation from a domestic corporation which would be a 100 percent dividend if section 1504(b)(3) did not apply for purposes of applying section 243(b)(2).
(F) Increase in policy cash values
For purposes of subparagraphs (C) and (D)—
(i) In general
The increase in the policy cash value for any taxable year with respect to policy or contract is the amount of the increase in the adjusted cash value during such taxable year determined without regard to—
(I) gross premiums paid during such taxable year, and
(II) distributions (other than amounts includible in the policyholder's gross income) during such taxable year to which section 72(e) applies.
(ii) Adjusted cash value
For purposes of clause (i), the term "adjusted cash value" means the cash surrender value of the policy or contract increased by the sum of—
(I) commissions payable with respect to such policy or contract for the taxable year, and
(II) asset management fees, surrender charges, mortality and expense charges, and any other fees or charges specified in regulations prescribed by the Secretary which are imposed (or which would be imposed were the policy or contract canceled) with respect to such policy or contract for the taxable year.
(5) Operations loss deduction
The operations loss deduction (determined under section 810).
(6) Assumption by another person of liabilities under insurance, etc., contracts
The consideration (other than consideration arising out of indemnity reinsurance) in respect of the assumption by another person of liabilities under insurance and annuity contracts.
(7) Reimbursable dividends
The amount of policyholder dividends which—
(A) are paid or accrued by another insurance company in respect of policies the taxpayer has reinsured, and
(B) are reimbursable by the taxpayer under the terms of the reinsurance contract.
(8) Other deductions
Subject to the modifications provided by subsection (b), all other deductions allowed under this subtitle for purposes of computing taxable income.
Except as provided in paragraph (3), no amount shall be allowed as a deduction under this part in respect of policyholder dividends.
(b) Modifications
The modifications referred to in subsection (a)(8) are as follows:
(1) Interest
In applying section 163 (relating to deduction for interest), no deduction shall be allowed for interest in respect of items described in section 807(c).
(2) Charitable, etc., contributions and gifts
In applying section 170—
(A) the limit on the total deductions under such section provided by section 170(b)(2) shall be 10 percent of the life insurance company taxable income computed without regard to—
(i) the deduction provided by section 170,
(ii) the deductions provided by paragraphs (3) and (4) of subsection (a),
(iii) the small life insurance company deduction,
(iv) any operations loss carryback to the taxable year under section 810, and
(v) any capital loss carryback to the taxable year under section 1212(a)(1), and
(B) under regulations prescribed by the Secretary, a rule similar to the rule contained in section 170(d)(2)(B) (relating to special rule for net operating loss carryovers) shall be applied.
(3) Amortizable bond premium
(A) In general
Section 171 shall not apply.
(B) Cross reference
For rules relating to amortizable bond premium, see section 811(b).
(4) Net operating loss deduction
Except as provided by section 844, the deduction for net operating losses provided in section 172 shall not be allowed.
(5) Dividends received deduction
Except as provided in subsection (a)(4), the deductions for dividends received provided by sections 243, 244, and 245 shall not be allowed.
(Added
Codification
Another section 1084(b) of
Prior Provisions
A prior section 805, added
Another prior section 805, acts Aug. 16, 1954, ch. 736,
Amendments
1997—Subsec. (a)(4)(C)(ii).
Subsec. (a)(4)(D)(iii).
Subsec. (a)(4)(F).
1996—Subsec. (a)(4)(E).
1987—Subsec. (a)(4)(B).
1986—Subsec. (a)(4)(B).
Subsec. (a)(4)(B)(i).
Subsec. (a)(4)(C) to (E).
Subsec. (b)(2).
Subsec. (b)(2)(A)(iii).
Subsec. (b)(3) to (6).
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by section 611(a)(5) of
Amendment by section 805(c)(6) of
Amendment by section 1011(b)(4) of
Amendment by section 1821(p) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§806. Small life insurance company deduction
(a) Small life insurance company deduction
(1) In general
For purposes of section 804, the small life insurance company deduction for any taxable year is 60 percent of so much of the tentative LICTI for such taxable year as does not exceed $3,000,000.
(2) Phaseout between $3,000,000 and $15,000,000
The amount of the small life insurance company deduction determined under paragraph (1) for any taxable year shall be reduced (but not below zero) by 15 percent of so much of the tentative LICTI for such taxable year as exceeds $3,000,000.
(3) Small life insurance company deduction not allowable to company with assets of $500,000,000 or more
(A) In general
The small life insurance company deduction shall not be allowed for any taxable year to any life insurance company which, at the close of such taxable year, has assets equal to or greater than $500,000,000.
(B) Assets
For purposes of this paragraph, the term "assets" means all assets of the company.
(C) Valuation of assets
For purposes of this paragraph, the amount attributable to—
(i) real property and stock shall be the fair market value thereof, and
(ii) any other asset shall be the adjusted basis of such asset for purposes of determining gain on sale or other disposition.
(D) Special rule for interests in partnerships and trusts
For purposes of this paragraph—
(i) an interest in a partnership or trust shall not be treated as an asset of the company, but
(ii) the company shall be treated as actually owning its proportionate share of the assets held by the partnership or trust (as the case may be).
(b) Tentative LICTI
For purposes of this part—
(1) In general
The term "tentative LICTI" means life insurance company taxable income determined without regard to the small life insurance company deduction.
(2) Exclusion of items attributable to noninsurance businesses
The amount of the tentative LICTI for any taxable year shall be determined without regard to all items attributable to noninsurance businesses.
(3) Noninsurance business
(A) In general
The term "noninsurance business" means any activity which is not an insurance business.
(B) Certain activities treated as insurance businesses
For purposes of subparagraph (A), any activity which is not an insurance business shall be treated as an insurance business if—
(i) it is of a type traditionally carried on by life insurance companies for investment purposes, but only if the carrying on of such activity (other than in the case of real estate) does not constitute the active conduct of a trade or business, or
(ii) it involves the performance of administrative services in connection with plans providing life insurance, pension, or accident and health benefits.
(C) Limitation on amount of loss from noninsurance business which may offset income from insurance business
In computing the life insurance company taxable income of any life insurance company, any loss from a noninsurance business shall be limited under the principles of section 1503(c).
(c) Special rule for controlled groups
(1) Small life insurance company deduction determined on controlled group basis
For purposes of subsection (a)—
(A) all life insurance companies which are members of the same controlled group shall be treated as 1 life insurance company, and
(B) any small life insurance company deduction determined with respect to such group shall be allocated among the life insurance companies which are members of such group in proportion to their respective tentative LICTI's.
(2) Nonlife insurance members included for asset test
For purposes of subsection (a)(3), all members of the same controlled group (whether or not life insurance companies) shall be treated as 1 company.
(3) Controlled group
For purposes of this subsection, the term "controlled group" means any controlled group of corporations (as defined in section 1563(a)); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply.
(4) Adjustments to prevent excess detriment or benefit
Under regulations prescribed by the Secretary, proper adjustments shall be made in the application of this subsection to prevent any excess detriment or benefit (whether from year-to-year or otherwise) arising from the application of this subsection.
(Added
Prior Provisions
A prior section 806, added
Another prior section 806, act Aug. 16, 1954, ch. 736,
Amendments
1986—
Subsec. (a).
Subsec. (b).
Subsecs. (c), (d).
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Determination of Tentative LICTI Where Corporation Made Certain Acquisitions in 1980, 1981, 1982, and 1983
"(1) a corporation domiciled or having its principal place of business in Alabama, Arkansas, Oklahoma, or Texas acquired the assets of 1 or more insurance companies after 1979 and before April 1, 1983, and
"(2) the bases of such assets in the hands of the corporation were determined under section 334(b)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] or such corporation made an election under section 338 of such Code with respect to such assets,
then the tentative LICTI of the corporation holding such assets for taxable years beginning after December 31, 1983, shall, for purposes of determining the amount of the special deductions under section 806 of such Code, be increased by the deduction allowable under
Determination of Assets of Controlled Group for Purposes of Small Life Insurance Company Deduction for 1984
"(1)
"(A) an election under section 1504(c)(2) of such Code is not in effect for the controlled group for such taxable year,
"(B) during such taxable year, the controlled group does not include a member which is taxable under part I of subchapter L of
"(C) the sum of the contributions to capital received by members of the controlled group which are taxable under such part I during such taxable year from the members of the controlled group which are not taxable under such part does not exceed the aggregate dividends paid during such taxable year by the members of such group which are taxable under such part I.
"(2)
"(A) any financial institution to which section 585 or 593 of such Code applies,
"(B) any lending or finance business (as defined by section 542(d)),
"(C) any insurance company subject to tax imposed by subchapter L of
"(D) any securities broker."
Special Rule for Certain Debt-Financed Acquisition of Stock
"(1) a life insurance company owns the stock of another corporation through a partnership of which it is a partner,
"(2) the stock of the corporation was acquired on January 14, 1981, and
"(3) such stock was acquired by debt financing,
then, for purposes of determining the small life insurance company deduction under section 806a of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this subtitle [subtitle A (§§211–219) of title II of div. A of
Treatment of Losses From Certain Guaranteed Interest Contracts
"(1)
"(2)
"(A) the accrual of discount less amortization of premium for bonds and short-term investments (as shown in the first footnote to Exhibit 3 of its 1983 annual statement for life insurance companies approved by the National Association of Insurance Commissioners (but excluding separate accounts) filed in its State of domicile) exceeds $72,000,000 but does not exceed $73,000,000, and
"(B) such life insurance company makes an election under this subsection on its return for its first taxable year beginning after December 31, 1983.
"(3)
"(A) which is issued before January 1, 1984,
"(B) which specifies the contract maturity or renewal date,
"(C) under which funds deposited by the contract holder plus interest guaranteed at the inception of the contract for the term of the contract and net of any specified expenses are paid as directed by the contract holder, and
"(D) which is a pension plan contract (as defined in section 818(a) of the Internal Revenue Code of 1986).
"(4)
"(5)
"(6)
Special Rule for Certain Interests in Oil and Gas Properties
"(1)
"(2)
"(A) was originally incorporated in March of 1857, and
"(B) has a cost to such company (as of December 31, 1983) in the operating mineral interests described in paragraph (1) in excess of $250,000,000."
§807. Rules for certain reserves
(a) Decrease treated as gross income
If for any taxable year—
(1) the opening balance for the items described in subsection (c), exceeds
(2)(A) the closing balance for such items, reduced by
(B) the amount of the policyholders' share of tax-exempt interest and the amount of the policyholder's share of the increase for the taxable year in policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies,
such excess shall be included in gross income under section 803(a)(2).
(b) Increase treated as deduction
If for any taxable year—
(1)(A) the closing balance for the items described in subsection (c), reduced by
(B) the amount of the policyholders' share of tax-exempt interest and the amount of the policyholder's share of the increase for the taxable year in policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, exceeds
(2) the opening balance for such items,
such excess shall be taken into account as a deduction under section 805(a)(2).
(c) Items taken into account
The items referred to in subsections (a) and (b) are as follows:
(1) The life insurance reserves (as defined in section 816(b)).
(2) The unearned premiums and unpaid losses included in total reserves under section 816(c)(2).
(3) The amounts (discounted at the appropriate rate of interest) necessary to satisfy the obligations under insurance and annuity contracts, but only if such obligations do not involve (at the time with respect to which the computation is made under this paragraph) life, accident, or health contingencies.
(4) Dividend accumulations, and other amounts, held at interest in connection with insurance and annuity contracts.
(5) Premiums received in advance, and liabilities for premium deposit funds.
(6) Reasonable special contingency reserves under contracts of group term life insurance or group accident and health insurance which are established and maintained for the provision of insurance on retired lives, for premium stabilization, or for a combination thereof.
For purposes of paragraph (3), the appropriate rate of interest for any obligation is whichever of the following rates is the highest as of the time such obligation first did not involve life, accident, or health contingencies: the applicable Federal interest rate under subsection (d)(2)(B)(i), the prevailing State assumed interest rate under subsection (d)(2)(B)(ii), or the rate of interest assumed by the company in determining the guaranteed benefit. In no case shall the amount determined under paragraph (3) for any contract be less than the net surrender value of such contract. For purposes of paragraph (2) and section 805(a)(1), the amount of the unpaid losses (other than losses on life insurance contracts) shall be the amount of the discounted unpaid losses as defined in section 846.
(d) Method of computing reserves for purposes of determining income
(1) In general
For purposes of this part (other than section 816), the amount of the life insurance reserves for any contract shall be the greater of—
(A) the net surrender value of such contract, or
(B) the reserve determined under paragraph (2).
In no event shall the reserve determined under the preceding sentence for any contract as of any time exceed the amount which would be taken into account with respect to such contract as of such time in determining statutory reserves (as defined in paragraph (6)).
(2) Amount of reserve
The amount of the reserve determined under this paragraph with respect to any contract shall be determined by using—
(A) the tax reserve method applicable to such contract,
(B) the greater of—
(i) the applicable Federal interest rate, or
(ii) the prevailing State assumed interest rate, and
(C) the prevailing commissioners' standard tables for mortality and morbidity adjusted as appropriate to reflect the risks (such as substandard risks) incurred under the contract which are not otherwise taken into account.
(3) Tax reserve method
For purposes of this subsection—
(A) In general
The term "tax reserve method" means—
(i) Life insurance contracts
The CRVM in the case of a contract covered by the CRVM.
(ii) Annuity contracts
The CARVM in the case of a contract covered by the CARVM.
(iii) Noncancellable accident and health insurance contracts
In the case of any noncancellable accident and health insurance contract (other than a qualified long-term care insurance contract, as defined in section 7702B(b)), a 2-year full preliminary term method.
(iv) Other contracts
In the case of any contract not described in clause (i), (ii), or (iii)—
(I) the reserve method prescribed by the National Association of Insurance Commissioners which covers such contract (as of the date of issuance), or
(II) if no reserve method has been prescribed by the National Association of Insurance Commissioners which covers such contract, a reserve method which is consistent with the reserve method required under clause (i), (ii), or (iii) or under subclause (I) of this clause as of the date of the issuance of such contract (whichever is most appropriate).
(B) Definition of CRVM and CARVM
For purposes of this paragraph—
(i) CRVM
The term "CRVM" means the Commissioners' Reserve Valuation Method prescribed by the National Association of Insurance Commissioners which is in effect on the date of the issuance of the contract.
(ii) CARVM
The term "CARVM" means the Commissioners' Annuities Reserve Valuation Method prescribed by the National Association of Insurance Commissioners which is in effect on the date of the issuance of the contract.
(C) No additional reserve deduction allowed for deficiency reserves
Nothing in any reserve method described under this paragraph shall permit any increase in the reserve because the net premium (computed on the basis of assumptions required under this subsection) exceeds the actual premiums or other consideration charged for the benefit.
(4) Applicable Federal interest rate; prevailing State assumed interest rate
For purposes of this subsection—
(A) Applicable Federal interest rate
(i) In general
Except as provided in clause (ii), the term "applicable Federal interest rate" means the annual rate determined by the Secretary under section 846(c)(2) for the calendar year in which the contract was issued.
(ii) Election to recompute Federal interest rate every 5 years
(I) In general
In computing the amount of the reserve with respect to any contract to which an election under this clause applies for periods during any recomputation period, the applicable Federal interest rate shall be the annual rate determined by the Secretary under section 846(c)(2) for the 1st year of such period. No change in the applicable Federal interest rate shall be made under the preceding sentence unless such change would equal or exceed ½ of 1 percentage point.
(II) Recomputation period
For purposes of subclause (I), the term "recomputation period" means, with respect to any contract, the 5 calendar year period beginning with the 5th calendar year beginning after the calendar year in which the contract was issued (and each subsequent 5 calendar year period).
(III) Election
An election under this clause shall apply to all contracts issued during the calendar year for which the election was made or during any subsequent calendar year unless such election is revoked with the consent of the Secretary.
(IV) Spread not available
Subsection (f) shall not apply to any adjustment required under this clause.
(B) Prevailing State assumed interest rate
(i) In general
The term "prevailing State assumed interest rate" means, with respect to any contract, the highest assumed interest rate permitted to be used in computing life insurance reserves for insurance contracts or annuity contracts (as the case may be) under the insurance laws of at least 26 States. For purposes of the preceding sentence, the effect of nonforfeiture laws of a State on interest rates for reserves shall not be taken into account.
(ii) When rate determined
The prevailing State assumed interest rate with respect to any contract shall be determined as of the beginning of the calendar year in which the contract was issued.
(5) Prevailing commissioners' standard tables
For purposes of this subsection—
(A) In general
The term "prevailing commissioners' standard tables" means, with respect to any contract, the most recent commissioners' standard tables prescribed by the National Association of Insurance Commissioners which are permitted to be used in computing reserves for that type of contract under the insurance laws of at least 26 States when the contract was issued.
(B) Insurer may use old tables for 3 years when tables change
If the prevailing commissioners' standard tables as of the beginning of any calendar year (hereinafter in this subparagraph referred to as the "year of change") is different from the prevailing commissioners' standard tables as of the beginning of the preceding calendar year, the issuer may use the prevailing commissioners' standard tables as of the beginning of the preceding calendar year with respect to any contract issued after the change and before the close of the 3-year period beginning on the first day of the year of change.
(C) Special rule for contracts for which there are no commissioners' standard tables
If there are no commissioners' standard tables applicable to any contract when it is issued, the mortality and morbidity tables used for purposes of paragraph (2)(C) shall be determined under regulations prescribed by the Secretary. When the Secretary by regulation changes the table applicable to a type of contract, the new table shall be treated (for purposes of subparagraph (B) and for purposes of determining the issue dates of contracts for which it shall be used) as if it were a new prevailing commissioner's standard table adopted by the twenty-sixth State as of a date (no earlier than the date the regulation is issued) specified by the Secretary.
(D) Special rule for contracts issued before 1948
If—
(i) a contract was issued before 1948, and
(ii) there were no commissioners' standard tables applicable to such contract when it was issued,
the mortality and morbidity tables used in computing statutory reserves for such contracts shall be used for purposes of paragraph (2)(C).
(E) Special rule where more than 1 table or option applicable
If, with respect to any category of risks, there are 2 or more tables (or options under 1 or more tables) which meet the requirements of subparagraph (A) (or, where applicable, subparagraph (B) or (C)), the table (and option thereunder) which generally yields the lowest reserves shall be used for purposes of paragraph (2)(C).
(6) Statutory reserves
The term "statutory reserves" means the aggregate amount set forth in the annual statement with respect to items described in section 807(c). Such term shall not include any reserve attributable to a deferred and uncollected premium if the establishment of such reserve is not permitted under section 811(c).
(e) Special rules for computing reserves
(1) Net surrender value
For purposes of this section—
(A) In general
The net surrender value of any contract shall be determined—
(i) with regard to any penalty or charge which would be imposed on surrender, but
(ii) without regard to any market value adjustment on surrender.
(B) Special rule for pension plan contracts
In the case of a pension plan contract, the balance in the policyholder's fund shall be treated as the net surrender value of such contract. For purposes of the preceding sentence, such balance shall be determined with regard to any penalty or forfeiture which would be imposed on surrender but without regard to any market value adjustment.
(2) Issuance date in case of group contracts
For purposes of this section, in the case of a group contract, the date on which such contract is issued shall be the date as of which the master plan is issued (or, with respect to a benefit guaranteed to a participant after such date, the date as of which such benefit is guaranteed).
(3) Supplemental benefits
(A) Qualified supplemental benefits treated separately
For purposes of this part, the amount of the life insurance reserve for any qualified supplemental benefit—
(i) shall be computed separately as though such benefit were under a separate contract, and
(ii) shall, except to the extent otherwise provided in regulations, be the reserve taken into account for purposes of the annual statement approved by the National Association of Insurance Commissioners.
(B) Supplemental benefits which are not qualified supplemental benefits
In the case of any supplemental benefit described in subparagraph (D) which is not a qualified supplemental benefit, the amount of the reserve determined under paragraph (2) of subsection (d) shall, except to the extent otherwise provided in regulations, be the reserve taken into account for purposes of the annual statement approved by the National Association of Insurance Commissioners.
(C) Qualified supplemental benefit
For purposes of this paragraph, the term "qualified supplemental benefit" means any supplemental benefit described in subparagraph (D) if—
(i) there is a separately identified premium or charge for such benefit, and
(ii) any net surrender value under the contract attributable to any other benefit is not available to fund such benefit.
(D) Supplemental benefits
For purposes of this paragraph, the supplemental benefits described in this subparagraph are any—
(i) guaranteed insurability,
(ii) accidental death or disability benefit,
(iii) convertibility,
(iv) disability waiver benefit, or
(v) other benefit prescribed by regulations,
which is supplemental to a contract for which there is a reserve described in subsection (c).
(4) Certain contracts issued by foreign branches of domestic life insurance companies
(A) In general
In the case of any qualified foreign contract, the amount of the reserve shall be not less than the minimum reserve required by the laws, regulations, or administrative guidance of the regulatory authority of the foreign country referred to in subparagraph (B) (but not to exceed the net level reserves for such contract).
(B) Qualified foreign contract
For purposes of subparagraph (A), the term "qualified foreign contract" means any contract issued by a foreign life insurance branch (which has its principal place of business in a foreign country) of a domestic life insurance company if—
(i) such contract is issued on the life or health of a resident of such country,
(ii) such domestic life insurance company was required by such foreign country (as of the time it began operations in such country) to operate in such country through a branch, and
(iii) such foreign country is not contiguous to the United States.
(5) Treatment of substandard risks
(A) Separate computation
Except to the extent provided in regulations, the amount of the life insurance reserve for any qualified substandard risk shall be computed separately under subsection (d)(1) from any other reserve under the contract.
(B) Qualified substandard risk
For purposes of subparagraph (A), the term "qualified substandard risk" means any substandard risk if—
(i) the insurance company maintains a separate reserve for such risk,
(ii) there is a separately identified premium or charge for such risk,
(iii) the amount of the net surrender value under the contract is not increased or decreased by reason of such risk, and
(iv) the net surrender value under the contract is not regularly used to pay premium charges for such risk.
(C) Limitation on amount of life insurance reserve
The amount of the life insurance reserve determined for any qualified substandard risk shall in no event exceed the sum of the separately identified premiums charged for such risk plus interest less mortality charges for such risk.
(D) Limitation on amount of contracts to which paragraph applies
The aggregate amount of insurance in force under contracts to which this paragraph applies shall not exceed 10 percent of the insurance in force (other than term insurance) under life insurance contracts of the company.
(6) Special rules for contracts issued before January 1, 1989, under existing plans of insurance, with term insurance or annuity benefits
For purposes of this part—
(A) In general
In the case of a life insurance contract issued before January 1, 1989, under an existing plan of insurance, the life insurance reserve for any benefit to which this paragraph applies shall be computed separately under subsection (d)(1) from any other reserve under the contract.
(B) Benefits to which this paragraph applies
This paragraph applies to any term insurance or annuity benefit with respect to which the requirements of clauses (i) and (ii) of paragraph (3)(C) are met.
(C) Existing plan of insurance
For purposes of this paragraph, the term "existing plan of insurance" means, with respect to any contract, any plan of insurance which was filed by the company using such contract in one or more States before January 1, 1984, and is on file in the appropriate State for such contract.
(7) Special rules for treatment of certain nonlife reserves
(A) In general
The amount taken into account for purposes of subsections (a) and (b) as—
(i) the opening balance of the items referred to in subparagraph (C), and
(ii) the closing balance of such items,
shall be 80 percent of the amount which (without regard to this subparagraph) would have been taken into account as such opening or closing balance, as the case may be.
(B) Transitional rule
(i) In general
In the case of any taxable year beginning on or after September 30, 1990, and before September 30, 1996, there shall be included in the gross income of any life insurance company an amount equal to 31/3 percent of such company's closing balance of the items referred to in subparagraph (C) for its most recent taxable year beginning before September 30, 1990.
(ii) Termination as life insurance company
Except as provided in section 381(c)(22), if, for any taxable year beginning on or before September 30, 1996, the taxpayer ceases to be a life insurance company, the aggregate inclusions which would have been made under clause (i) for such taxable year and subsequent taxable years but for such cessation shall be taken into account for the taxable year preceding such cessation year.
(C) Description of items
For purposes of this paragraph, the items referred to in this subparagraph are the items described in subsection (c) which consist of unearned premiums and premiums received in advance under insurance contracts not described in section 816(b)(1)(B).
(f) Adjustment for change in computing reserves
(1) 10-year spread
(A) In general
For purposes of this part, if the basis for determining any item referred to in subsection (c) as of the close of any taxable year differs from the basis for such determination as of the close of the preceding taxable year, then so much of the difference between—
(i) the amount of the item at the close of the taxable year, computed on the new basis, and
(ii) the amount of the item at the close of the taxable year, computed on the old basis,
as is attributable to contracts issued before the taxable year shall be taken into account under the method provided in subparagraph (B).
(B) Method
The method provided in this subparagraph is as follows:
(i) if the amount determined under subparagraph (A)(i) exceeds the amount determined under subparagraph (A)(ii), 1/10 of such excess shall be taken into account, for each of the succeeding 10 taxable years, as a deduction under section 805(a)(2); or
(ii) if the amount determined under subparagraph (A)(ii) exceeds the amount determined under subparagraph (A)(i), 1/10 of such excess shall be included in gross income, for each of the 10 succeeding taxable years, under section 803(a)(2).
(2) Termination as life insurance company
Except as provided in section 381(c)(22) (relating to carryovers in certain corporate readjustments), if for any taxable year the taxpayer is not a life insurance company, the balance of any adjustments under this subsection shall be taken into account for the preceding taxable year.
(Added
Codification
Another section 1084(b) of
Prior Provisions
A prior section 807, act Aug. 16, 1954, ch. 736,
Amendments
2004—Subsecs. (a)(2)(B), (b)(1)(B).
Subsec. (d)(1).
Subsec. (d)(6).
1997—Subsec. (a)(2)(B).
Subsec. (b)(1)(B).
1996—Subsec. (d)(3)(A)(iii).
Subsec. (d)(3)(B)(ii).
1990—Subsec. (e)(7).
1987—Subsec. (c).
Subsec. (d)(2)(B).
Subsec. (d)(4).
1986—Subsec. (c).
Subsec. (d)(5)(C).
Effective Date of 2004 Amendment
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1990 Amendment
Effective Date of 1987 Amendment
Effective Date of 1986 Amendment
Amendment by section 1023(b) of
Amendment by section 1821(a), (s) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Treatment of Certain Assessment Life Insurance Companies
"(1)
"(A) in use since 1965, and
"(B) developed on the basis of the experience of assessment life insurance companies in the State in which such assessment life insurance company is domiciled.
"(2)
"(A) has been in existence since 1965, and
"(B) operates under
for purposes of part I of subchapter L of
"(3)
Special Rule for Companies Using Net Level Reserve Method for Noncancellable Accident and Health Insurance Contracts
"(1) such company—
"(A) was using the net level reserve method to compute at least 99 percent of its statutory reserves on such contracts as of December 31, 1982, and
"(B) received more than half its total direct premiums in 1982 from directly-written noncancellable accident and health insurance,
"(2) after December 31, 1983, and through such taxable year, such company has continuously used the net level reserve method for computing at least 99 percent of its tax and statutory reserves on such contracts, and
"(3) for any such contract for which the company does not use the net level reserve method, such company uses the same method for computing tax reserves as such company uses for computing its statutory reserves."
§808. Policyholder dividends deduction
(a) Policyholder dividend defined
For purposes of this part, the term "policyholder dividend" means any dividend or similar distribution to policyholders in their capacity as such.
(b) Certain amounts included
For purposes of this part, the term "policyholder dividend" includes—
(1) any amount paid or credited (including as an increase in benefits) where the amount is not fixed in the contract but depends on the experience of the company or the discretion of the management,
(2) excess interest,
(3) premium adjustments, and
(4) experience-rated refunds.
(c) Amount of deduction
The deduction for policyholder dividends for any taxable year shall be an amount equal to the policyholder dividends paid or accrued during the taxable year.
(d) Definitions
For purposes of this section—
(1) Excess interest
The term "excess interest" means any amount in the nature of interest—
(A) paid or credited to a policyholder in his capacity as such, and
(B) in excess of interest determined at the prevailing State assumed rate for such contract.
(2) Premium adjustment
The term "premium adjustment" means any reduction in the premium under an insurance or annuity contract which (but for the reduction) would have been required to be paid under the contract.
(3) Experience-rated refund
The term "experience-rated refund" means any refund or credit based on the experience of the contract or group involved.
(e) Treatment of policyholder dividends
For purposes of this part, any policyholder dividend which—
(1) increases the cash surrender value of the contract or other benefits payable under the contract, or
(2) reduces the premium otherwise required to be paid,
shall be treated as paid to the policyholder and returned by the policyholder to the company as a premium.
(f) Coordination of 1984 fresh-start adjustment with acceleration of policyholder dividends deduction through change in business practice
(1) In general
The amount determined under paragraph (1) of subsection (c) for the year of change shall (before any reduction under paragraph (2) of subsection (c)) be reduced by so much of the accelerated policyholder dividends deduction for such year as does not exceed the 1984 fresh-start adjustment for policyholder dividends (to the extent such adjustment was not previously taken into account under this subsection).
(2) Year of change
For purposes of this subsection, the term "year of change" means the taxable year in which the change in business practices which results in the accelerated policyholder dividends deduction takes effect.
(3) Accelerated policyholder dividends deduction defined
For purposes of this subsection, the term "accelerated policyholder dividends deduction" means the amount which (but for this subsection) would be determined for the taxable year under paragraph (1) of subsection (c) but which would have been determined (under such paragraph) for a later taxable year under the business practices of the taxpayer as in effect at the close of the preceding taxable year.
(4) 1984 fresh-start adjustment for policyholder dividends
For purposes of this subsection, the term "1984 fresh-start adjustment for policyholder dividends" means the amounts held as of December 31, 1983, by the taxpayer as reserves for dividends to policyholders under section 811(b) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1984) other than for dividends which accrued before January 1, 1984. Such amounts shall be properly reduced to reflect the amount of previously nondeductible policyholder dividends (as determined under section 809(f) as in effect on the day before the date of the enactment of the Tax Reform Act of 1984).
(5) Separate application with respect to lines of business
This subsection shall be applied separately with respect to each line of business of the taxpayer.
(6) Subsection not to apply to mere change in dividend amount
This subsection shall not apply to a mere change in the amount of policyholder dividends.
(7) Subsection not to apply to policies issued after December 31, 1983
(A) In general
This subsection shall not apply to any policyholder dividend paid or accrued with respect to a policy issued after December 31, 1983.
(B) Exchanges of substantially similar policies
For purposes of subparagraph (A), any policy issued after December 31, 1983, in exchange for a substantially similar policy issued on or before such date shall be treated as issued before January 1, 1984. A similar rule shall apply in the case of a series of exchanges.
(8) Subsection to apply to policies provided under employee benefit plans
This subsection shall not apply to any policyholder dividend paid or accrued with respect to a group policy issued in connection with a plan to provide welfare benefits to employees (within the meaning of section 419(e)(2)).
(Added
References in Text
The date of enactment of the Tax Reform Act of 1984, referred to in subsec. (f)(4), is the date of enactment of
Amendments
2004—Subsec. (c).
"(1)
"(2)
1986—Subsec. (d)(1)(B).
Subsec. (f).
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
[§809. Repealed. Pub. L. 108–218, title II, §205(a), Apr. 10, 2004, 118 Stat. 610 ]
Section, added
A prior section 809, added
Effective Date of Repeal
Repeal applicable to taxable years beginning after Dec. 31, 2004, see section 205(c) of
§810. Operations loss deduction
(a) Deduction allowed
There shall be allowed as a deduction for the taxable year an amount equal to the aggregate of—
(1) the operations loss carryovers to such year, plus
(2) the operations loss carrybacks to such year.
For purposes of this part, the term "operations loss deduction" means the deduction allowed by this subsection.
(b) Operations loss carrybacks and carryovers
(1) Years to which loss may be carried
The loss from operations for any taxable year (hereinafter in this section referred to as the "loss year") shall be—
(A) an operations loss carryback to each of the 3 taxable years preceding the loss year,
(B) an operations loss carryover to each of the 15 taxable years following the loss year, and
(C) if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 15 taxable years described in subparagraph (B).
(2) Amount of carrybacks and carryovers
The entire amount of the loss from operations for any loss year shall be carried to the earliest of the taxable years to which (by reason of paragraph (1)) such loss may be carried. The portion of such loss which shall be carried to each of the other taxable years shall be the excess (if any) of the amount of such loss over the sum of the offsets (as defined in subsection (d)) for each of the prior taxable years to which such loss may be carried.
(3) Election for operations loss carrybacks
In the case of a loss from operations for any taxable year, the taxpayer may elect to relinquish the entire carryback period for such loss. Such election shall be made by the due date (including extensions of time) for filing the return for the taxable year of the loss from operations for which the election is to be in effect, and, once made for any taxable year, such election shall be irrevocable for that taxable year.
(4) Carryback for 2008 or 2009 losses
(A) In general
In the case of an applicable loss from operations with respect to which the taxpayer has elected the application of this paragraph, paragraph (1)(A) shall be applied by substituting any whole number elected by the taxpayer which is more than 3 and less than 6 for "3".
(B) Applicable loss from operations
For purposes of this paragraph, the term "applicable loss from operations" means the taxpayer's loss from operations for a taxable year ending after December 31, 2007, and beginning before January 1, 2010.
(C) Election
(i) In general
Any election under this paragraph may be made only with respect to 1 taxable year.
(ii) Procedure
Any election under this paragraph shall be made in such manner as may be prescribed by the Secretary, and shall be made by the due date (including extension of time) for filing the return for the taxpayer's last taxable year beginning in 2009. Any such election, once made, shall be irrevocable.
(D) Limitation on amount of loss carryback to 5th preceding taxable year
(i) In general
The amount of any loss from operations which may be carried back to the 5th taxable year preceding the taxable year of such loss under subparagraph (A) shall not exceed 50 percent of the taxpayer's taxable income (computed without regard to the loss from operations for the loss year or any taxable year thereafter) for such preceding taxable year.
(ii) Carrybacks and carryovers to other taxable years
Appropriate adjustments in the application of the second sentence of paragraph (2) shall be made to take into account the limitation of clause (i).
(c) Computation of loss from operations
For purposes of this section—
(1) In general
The term "loss from operations" means the excess of the life insurance deductions for any taxable year over the life insurance gross income for such taxable year.
(2) Modifications
For purposes of paragraph (1)—
(A) the operations loss deduction shall not be allowed, and
(B) the deductions allowed by sections 243 (relating to dividends received by corporations), 244 (relating to dividends received on certain preferred stock of public utilities), and 245 (relating to dividends received from certain foreign corporations) shall be computed without regard to section 246(b) as modified by section 805(a)(4).
(d) Offset defined
(1) In general
For purposes of subsection (b)(2), the term "offset" means, with respect to any taxable year, an amount equal to that increase in the operations loss deduction for the taxable year which reduces the life insurance company taxable income (computed without regard to paragraphs (2) and (3) of section 804) 1 or such year to zero.
(2) Operations loss deduction
For purposes of paragraph (1), the operations loss deduction for any taxable year shall be computed without regard to the loss from operations for the loss year or for any taxable year thereafter.
(e) New company defined
For purposes of this part, a life insurance company is a new company for any taxable year only if such taxable year begins not more than 5 years after the first day on which it (or any predecessor, if section 381(c)(22) applies) was authorized to do business as an insurance company.
(f) Application of subtitles A and F in respect of operation losses
Except as provided in section 805(b)(5),1 subtitles A and F shall apply in respect of operation loss carrybacks, operation loss carryovers, and the operations loss deduction under this part, in the same manner and to the same extent as such subtitles apply in respect of net operating loss carrybacks, net operating loss carryovers, and the net operating loss deduction.
(g) Transitional rule
For purposes of this section and section 812 (as in effect before the enactment of the Life Insurance Tax Act of 1984), this section shall be treated as a continuation of such section 812.
(Added
References in Text
Paragraphs (2) and (3) of section 804, referred to in subsec. (d)(1), were repealed and a new paragraph (2) enacted by
The Life Insurance Tax Act of 1984, referred to in subsec. (g), probably means title II of div. A of
Prior Provisions
A prior section 810, added
Amendments
2009—Subsec. (b)(4).
Effective Date of 2009 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
1 See References in Text note below.
Subpart D—Accounting, Allocation, and Foreign Provisions
Amendments
1987—
§811. Accounting provisions
(a) Method of accounting
All computations entering into the determination of the taxes imposed by this part shall be made—
(1) under an accrual method of accounting, or
(2) to the extent permitted under regulations prescribed by the Secretary, under a combination of an accrual method of accounting with any other method permitted by this chapter (other than the cash receipts and disbursements method).
To the extent not inconsistent with the preceding sentence or any other provision of this part, all such computations shall be made in a manner consistent with the manner required for purposes of the annual statement approved by the National Association of Insurance Commissioners.
(b) Amortization of premium and accrual of discount
(1) In general
The appropriate items of income, deductions, and adjustments under this part shall be adjusted to reflect the appropriate amortization of premium and the appropriate accrual of discount attributable to the taxable year on bonds, notes, debentures, or other evidences of indebtedness held by a life insurance company. Such amortization and accrual shall be determined—
(A) in accordance with the method regularly employed by such company, if such method is reasonable, and
(B) in all other cases, in accordance with regulations prescribed by the Secretary.
(2) Special rules
(A) Amortization of bond premium
In the case of any bond (as defined in section 171(d)), the amount of bond premium, and the amortizable bond premium for the taxable year, shall be determined under section 171(b) as if the election set forth in section 171(c) had been made.
(B) Convertible evidence of indebtedness
In no case shall the amount of premium on a convertible evidence of indebtedness include any amount attributable to the conversion features of the evidence of indebtedness.
(3) Exception
No accrual of discount shall be required under paragraph (1) on any bond (as defined in section 171(d)), except in the case of discount which is—
(A) interest to which section 103 applies, or
(B) original issue discount (as defined in section 1273).
(c) No double counting
Nothing in this part shall permit—
(1) a reserve to be established for any item unless the gross amount of premiums and other consideration attributable to such item are required to be included in life insurance gross income,
(2) the same item to be counted more than once for reserve purposes, or
(3) any item to be deducted (either directly or as an increase in reserves) more than once.
(d) Method of computing reserves on contract where interest is guaranteed beyond end of taxable year
For purposes of this part (other than section 816), amounts in the nature of interest to be paid or credited under any contract for any period which is computed at a rate which—
(1) exceeds the greater of the prevailing State assumed interest rate or applicable Federal interest rate in effect under section 807 for the contract for such period, and
(2) is guaranteed beyond the end of the taxable year on which the reserves are being computed,
shall be taken into account in computing the reserves with respect to such contract as if such interest were guaranteed only up to the end of the taxable year.
(e) Short taxable years
If any return of a corporation made under this part is for a period of less than the entire calendar year (referred to in this subsection as "short period"), then section 443 shall not apply in respect to such period, but life insurance company taxable income shall be determined, under regulations prescribed by the Secretary, on an annual basis by a ratable daily projection of the appropriate figures for the short period.
(Added and amended
Prior Provisions
A prior section 811, added
Another prior section 811, act Aug. 16, 1954, ch. 736, §811, as added Mar. 13, 1956, ch. 83, §2,
Amendments
1988—Subsec. (d)(1).
1984—Subsec. (b)(3).
Effective Date of 1988 Amendment
Amendment by
Effective Date of 1984 Amendment
Amendment by section 42(a)(8) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
§812. Definition of company's share and policyholders' share
(a) General rule
(1) Company's share
For purposes of section 805(a)(4), the term "company's share" means, with respect to any taxable year, the percentage obtained by dividing—
(A) the company's share of the net investment income for the taxable year, by
(B) the net investment income for the taxable year.
(2) Policyholders' share
For purposes of section 807, the term "policyholders' share" means, with respect to any taxable year, the excess of 100 percent over the percentage determined under paragraph (1).
(b) Company's share of net investment income
(1) In general
For purposes of this section, the company's share of net investment income is the excess (if any) of—
(A) the net investment income for the taxable year, over
(B) the sum of—
(i) the policy interest, for the taxable year, plus
(ii) the gross investment income's proportionate share of policyholder dividends for the taxable year.
(2) Policy interest
For purposes of this subsection, the term "policy interest" means—
(A) required interest (at the greater of the prevailing State assumed rate or the applicable Federal interest rate) on reserves under section 807(c) (other than paragraph (2) thereof),
(B) the deductible portion of excess interest,
(C) the deductible portion of any amount (whether or not a policyholder dividend), and not taken into account under subparagraph (A) or (B), credited to—
(i) a policyholder's fund under a pension plan contract for employees (other than retired employees), or
(ii) a deferred annuity contract before the annuity starting date, and
(D) interest on amounts left on deposit with the company.
In any case where neither the prevailing State assumed interest rate nor the applicable Federal interest rate is used, another appropriate rate shall be used for purposes of subparagraph (A).
(3) Gross investment income's proportionate share of policyholder dividends
For purposes of paragraph (1), the gross investment income's proportionate share of policyholder dividends is—
(A) the deduction for policyholders' dividends determined under section 808 for the taxable year, but not including—
(i) the deductible portion of excess interest,
(ii) the deductible portion of policyholder dividends on contracts referred to in clauses (i) and (ii) of paragraph (2)(C), and
(iii) the deductible portion of the premium and mortality charge adjustments with respect to contracts paying excess interest for such year,
multiplied by
(B) the fraction—
(i) the numerator of which is gross investment income for the taxable year (reduced by the policy interest for such year), and
(ii) the denominator of which is life insurance gross income reduced by the excess (if any) of the closing balance for the items described in section 807(c) over the opening balance for such items for the taxable year.
For purposes of subparagraph (B)(ii), life insurance gross income shall be determined by including tax-exempt interest and by applying section 807(a)(2)(B) as if it did not contain clause (i) thereof.
(c) Net investment income
For purposes of this section, the term "net investment income" means—
(1) except as provided in paragraph (2), 90 percent of gross investment income; or
(2) in the case of gross investment income attributable to assets held in segregated asset accounts under variable contracts, 95 percent of gross investment income.
(d) Gross investment income
For purposes of this section, the term "gross investment income" means the sum of the following:
(1) Interest, etc.
The gross amount of income from—
(A) interest (including tax-exempt interest), dividends, rents, and royalties,
(B) the entering into of any lease, mortgage, or other instrument or agreement from which the life insurance company derives interest, rents, or royalties,
(C) the alteration or termination of any instrument or agreement described in subparagraph (B), and
(D) the increase for any taxable year in the policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies.
(2) Short-term capital gain
The amount (if any) by which the net short-term capital gain exceeds the net long-term capital loss.
(3) Trade or business income
The gross income from any trade or business (other than an insurance business) carried on by the life insurance company, or by a partnership of which the life insurance company is a partner. In computing gross income under this paragraph, there shall be excluded any item described in paragraph (1).
Except as provided in paragraph (2), in computing gross investment income under this subsection, there shall be excluded any gain from the sale or exchange of a capital asset, and any gain considered as gain from the sale or exchange of a capital asset.
(e) Dividends from certain subsidiaries not included in gross investment income
(1) In general
For purposes of this section, the term "gross investment income" shall not include any dividend received by the life insurance company which is a 100 percent dividend.
(2) 100 percent dividend defined
(A) In general
Except as provided in subparagraphs (B) and (C), the term "100 percent dividend" means any dividend if the percentage used for purposes of determining the deduction allowable under section 243, 244, or 245(b) is 100 percent.
(B) Certain dividends out of tax-exempt interest, etc.
The term "100 percent dividend" does not include any distribution by a corporation to the extent such distribution is out of tax-exempt interest or out of dividends which are not 100 percent dividends (determined with the application of this subparagraph).
(C) Certain dividends received by foreign corporations
The term "100 percent dividends" does not include any dividend described in section 805(a)(4)(E) (relating to certain dividends in the case of foreign corporations).
(f) No double counting
Under regulations, proper adjustments shall be made in the application of this section to prevent an item from being counted more than once.
(Added
Codification
Another section 1084(b) of
Prior Provisions
A prior section 812, added
Another prior section 812, act Aug. 16, 1954, ch. 736, §812, as added Mar. 13, 1956, ch. 83, §2,
Amendments
2004—Subsec. (b)(3)(A).
1997—Subsec. (d)(1)(D).
1996—Subsec. (g).
1988—Subsec. (b)(2).
Subsec. (e).
1987—Subsec. (b)(2).
1986—Subsec. (b)(2).
Subsec. (b)(3)(B).
Subsec. (c).
Subsec. (g).
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1997 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by section 1602(b)(1) of
Effective Date of 1988 Amendment
Amendment by section 2004(p)(2) of
Effective Date of 1987 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
[§813. Repealed. Pub. L. 100–203, title X, §10242(c)(1), Dec. 22, 1987, 101 Stat. 1330–423 ]
Section, added
A prior section 813, act Aug. 16, 1954, ch. 736, §813, as added Mar. 13, 1956, ch. 83, §2,
Effective Date of Repeal
Repeal applicable to taxable years beginning after Dec. 31, 1987, see section 10242(d) of
§814. Contiguous country branches of domestic life insurance companies
(a) Exclusion of items
In the case of a domestic mutual insurance company which—
(1) is a life insurance company,
(2) has a contiguous country life insurance branch, and
(3) makes the election provided by subsection (g) with respect to such branch,
there shall be excluded from each item involved in the determination of life insurance company taxable income the items separately accounted for in accordance with subsection (c).
(b) Contiguous country life insurance branch
For purposes of this section, the term contiguous country life insurance branch means a branch which—
(1) issues insurance contracts insuring risks in connection with the lives or health of residents of a country which is contiguous to the United States,
(2) has its principal place of business in such contiguous country, and
(3) would constitute a mutual life insurance company if such branch were a separate domestic insurance company.
For purposes of this section, the term "insurance contract" means any life, health, accident, or annuity contract or reinsurance contract or any contract relating thereto.
(c) Separate accounting required
Any taxpayer which makes the election provided by subsection (g) shall establish and maintain a separate account for the various income, exclusion, deduction, asset, reserve, liability, and surplus items properly attributable to the contracts described in subsection (b). Such separate accounting shall be made—
(1) in accordance with the method regularly employed by such company, if such method clearly reflects income derived from, and the other items attributable to, the contracts described in subsection (b), and
(2) in all other cases, in accordance with regulations prescribed by the Secretary.
(d) Recognition of gain on assets in branch account
If the aggregate fair market value of all the invested assets and tangible property which are separately accounted for by the domestic life insurance company in the branch account established pursuant to subsection (c) exceeds the aggregate adjusted basis of such assets for purposes of determining gain, then the domestic life insurance company shall be treated as having sold all such assets on the first day of the first taxable year for which the election is in effect at their fair market value on such first day. Notwithstanding any other provision of this chapter, the net gain shall be recognized to the domestic life insurance company on the deemed sale described in the preceding sentence.
(e) Transactions between contiguous country branch and domestic life insurance company
(1) Reimbursement for home office services, etc.
Any payment, transfer, reimbursement, credit, or allowance which is made from a separate account established pursuant to subsection (c) to one or more other accounts of a domestic life insurance company as reimbursement for costs incurred for or with respect to the insurance (or reinsurance) of risks accounted for in such separate account shall be taken into account by the domestic life insurance company in the same manner as if such payment, transfer, reimbursement, credit, or allowance had been received from a separate person.
(2) Repatriation of income
(A) In general
Except as provided in subparagraph (B), any amount directly or indirectly transferred or credited from a branch account established pursuant to subsection (c) to one or more other accounts of such company shall, unless such transfer or credit is a reimbursement to which paragraph (1) applies, be added to the income of the domestic life insurance company.
(B) Limitation
The addition provided by subparagraph (A) for the taxable year with respect to any contiguous country life insurance branch shall not exceed the amount by which—
(i) the aggregate decrease in the tentative LICTI of the domestic life insurance company for the taxable year and for all prior taxable years resulting solely from the application of subsection (a) of this section with respect to such branch, exceeds
(ii) the amount of additions to tentative LICTI pursuant to subparagraph (A) with respect to such contiguous country branch for all prior taxable years.
(C) Transitional rule
For purposes of this paragraph, in the case of a prior taxable year beginning before January 1, 1984, the term "tentative LICTI" means life insurance company taxable income determined under this part (as in effect for such year) without regard to this paragraph.
(f) Other rules
(1) Treatment of foreign taxes
(A) In general
No income, war profits, or excess profits taxes paid or accrued to any foreign country or possession of the United States which is attributable to income excluded under subsection (a) shall be taken into account for purposes of subpart A of part III of subchapter N (relating to foreign tax credit) or allowable as a deduction.
(B) Treatment of repatriated amounts
For purposes of sections 78 and 902, where any amount is added to the life insurance company taxable income of the domestic life insurance company by reason of subsection (e)(2), the contiguous country life insurance branch shall be treated as a foreign corporation. Any amount so added shall be treated as a dividend paid by a foreign corporation, and the taxes paid to any foreign country or possession of the United States with respect to such amount shall be deemed to have been paid by such branch.
(2) United States source income allocable to contiguous country branch
For purposes of sections 881, 882, and 1442, each contiguous country life insurance branch shall be treated as a foreign corporation. Such sections shall be applied to each such branch in the same manner as if such sections contained the provisions of any treaty to which the United States and the contiguous country are parties, to the same extent such provisions would apply if such branch were incorporated in such contiguous country.
(g) Election
A taxpayer may make the election provided by this subsection with respect to any contiguous country for any taxable year. An election made under this subsection for any taxable year shall remain in effect for all subsequent taxable years, except that it may be revoked with the consent of the Secretary. The election provided by this subsection shall be made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof) with respect to which such election is made, and such election and any approved revocation thereof shall be made in the manner provided by the Secretary.
(h) Special rule for domestic stock life insurance companies
At the election of a domestic stock life insurance company which has a contiguous country life insurance branch described in subsection (b) (without regard to the mutual requirement in subsection (b)(3)), the assets of such branch may be transferred to a foreign corporation organized under the laws of the contiguous country without the application of section 367. Subsection (a) shall apply to the stock of such foreign corporation as if such domestic company were a mutual company and as if the stock were an item described in subsection (c). Subsection (e)(2) shall apply to amounts transferred or credited to such domestic company as if such domestic company and such foreign corporation constituted one domestic mutual life insurance company. The insurance contracts which may be transferred pursuant to this subsection shall include only those which are similar to the types of insurance contracts issued by a mutual life insurance company. Notwithstanding the first sentence of this subsection, if the aggregate fair market value of the invested assets and tangible property which are separately accounted for by the domestic life insurance company in the branch account exceeds the aggregate adjusted basis of such assets for purposes of determining gain, the domestic life insurance company shall be deemed to have sold all such assets on the first day of the taxable year for which the election under this subsection applies and the net gain shall be recognized to the domestic life insurance company on the deemed sale, but not in excess of the proportion of such net gain which equals the proportion which the aggregate fair market value of such assets which are transferred pursuant to this subsection is of the aggregate fair market value of all such assets.
(Added
Amendments
1997—Subsec. (h).
New Section 814 Treated as Continuation of Section 819A
"(1) any election under section 819A of such Code (as in effect on the day before the date of the enactment of this Act [July 18, 1984]) shall be treated as an election under such section 814, and
"(2) any reference to a provision of such section 814 shall be treated as including a reference to the corresponding provision of such section 819A."
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
§815. Distributions to shareholders from pre-1984 policyholders surplus account
(a) General rule
In the case of a stock life insurance company which has an existing policyholders surplus account, the tax imposed by section 801 for any taxable year shall be the amount which would be imposed by such section for such year on the sum of—
(1) life insurance company taxable income for such year (but not less than zero), plus
(2) the amount of direct and indirect distributions during such year to shareholders from such account.
For purposes of the preceding sentence, the term "indirect distribution" shall not include any bona fide loan with arms-length terms and conditions.
(b) Ordering rule
For purposes of this section, any distribution to shareholders shall be treated as made—
(1) first out of the shareholders surplus account, to the extent thereof,
(2) then out of the policyholders surplus account, to the extent thereof, and
(3) finally, out of other accounts.
(c) Shareholders surplus account
(1) In general
Each stock life insurance company which has an existing policyholders surplus account shall continue its shareholders surplus account for purposes of this part.
(2) Additions to account
The amount added to the shareholders surplus account for any taxable year beginning after December 31, 1983, shall be the excess of—
(A) the sum of—
(i) the life insurance company's taxable income (but not below zero),
(ii) the small life insurance company deduction provided by section 806, and
(iii) the deductions for dividends received provided by sections 243, 244, and 245 (as modified by section 805(a)(4)) and the amount of interest excluded from gross income under section 103, over
(B) the taxes imposed for the taxable year by section 801 (determined without regard to this section).
If for any taxable year a tax is imposed by section 55, under regulations proper adjustments shall be made for such year and all subsequent taxable years in the amounts taken into account under subparagraphs (A) and (B) of this paragraph and subparagraph (B) of subsection (d)(3).
(3) Subtractions from account
There shall be subtracted from the shareholders surplus account for any taxable year the amount which is treated under this section as distributed out of such account.
(d) Policyholders surplus account
(1) In general
Each stock life insurance company which has an existing policyholders surplus account shall continue such account.
(2) No additions to account
No amount shall be added to the policyholders surplus account for any taxable year beginning after December 31, 1983.
(3) Subtractions from account
There shall be subtracted from the policyholders surplus account for any taxable year an amount equal to the sum of—
(A) the amount which (without regard to subparagraph (B)) is treated under this section as distributed out of the policyholders surplus account, and
(B) the amount by which the tax imposed for the taxable year by section 801 is increased by reason of this section.
(e) Existing policyholders surplus account
For purposes of this section, the term "existing policyholders surplus account" means any policyholders surplus account which has a balance as of the close of December 31, 1983.
(f) Other rules applicable to policyholders surplus account continued
Except to the extent inconsistent with the provisions of this part, the provisions of subsections (d), (e), (f), and (g) of section 815 (and of sections 819(b), 6501(c)(6), 6501(k), 6511(d)(6), 6601(d)(3), and 6611(f)(4)) as in effect before the enactment of the Tax Reform Act of 1984 are hereby made applicable in respect of any policyholders surplus account for which there was a balance as of December 31, 1983.
(g) Special rules applicable during 2005 and 2006
In the case of any taxable year of a stock life insurance company beginning after December 31, 2004, and before January 1, 2007—
(1) the amount under subsection (a)(2) for such taxable year shall be treated as zero, and
(2) notwithstanding subsection (b), in determining any subtractions from an account under subsections (c)(3) and (d)(3), any distribution to shareholders during such taxable year shall be treated as made first out of the policyholders surplus account, then out of the shareholders surplus account, and finally out of other accounts.
(Added
References in Text
The enactment of the Tax Reform Act of 1984, referred to in subsec. (f), means the enactment of division A of
Prior Provisions
A prior section 815, added
Amendments
2004—Subsec. (g).
1988—Subsec. (c)(2).
1986—Subsec. (a).
Subsec. (c)(2)(A)(ii).
Subsec. (f).
Effective Date of 2004 Amendment
Effective Date of 1988 Amendment
Effective Date of 1986 Amendment
Amendment by section 1011(b)(10) of
Amendment by section 1821(k)(1), (2) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Operations Loss Deduction of Insolvent Companies May Offset Distributions From Policyholders Surplus Account
"(a)
"(1) on November 15, 1985, a life insurance company was insolvent,
"(2) pursuant to the order of any court of competent jurisdiction in a title 11 or similar case (as defined in section 368(a)(3) of the Internal Revenue Code of 1954 [now 1986]), such company is liquidated, and
"(3) as a result of such liquidation, the tax imposed by section 801 of such Code for any taxable year (hereinafter in this subsection referred to as the 'liquidation year') would (but for this subsection) be increased under section 815(a) of such Code,
then the amount described in section 815(a)(2) of such Code shall be reduced by the loss from operations (if any) for the liquidation year, and by the unused operations loss carryovers (if any) to the liquidation year (determined after the application of section 810 of such Code for such year). No carryover of any loss from operations of such company arising during the liquidation year (or any prior taxable year) shall be allowable for any taxable year succeeding the liquidation year.
"(b)
"(1)
"(2)
"(c)
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Amount of Indirect Distribution for Loans Before March 1, 1986; Determination; Exception
Subpart E—Definitions and Special Rules
Amendments
1996—
§816. Life insurance company defined
(a) Life insurance company defined
For purposes of this subtitle, the term "life insurance company" means an insurance company which is engaged in the business of issuing life insurance and annuity contracts (either separately or combined with accident and health insurance), or noncancellable contracts of health and accident insurance, if—
(1) its life insurance reserves (as defined in subsection (b)), plus
(2) unearned premiums, and unpaid losses (whether or not ascertained), on noncancellable life, accident, or health policies not included in life insurance reserves,
comprise more than 50 percent of its total reserves (as defined in subsection (c)). For purposes of the preceding sentence, the term "insurance company" means any company more than half of the business of which during the taxable year is the issuing of insurance or annuity contracts or the reinsuring of risks underwritten by insurance companies.
(b) Life insurance reserves defined
(1) In general
For purposes of this part, the term "life insurance reserves" means amounts—
(A) which are computed or estimated on the basis of recognized mortality or morbidity tables and assumed rates of interest, and
(B) which are set aside to mature or liquidate, either by payment or reinsurance, future unaccrued claims arising from life insurance, annuity, and noncancellable accident and health insurance contracts (including life insurance or annuity contracts combined with noncancellable accident and health insurance) involving, at the time with respect to which the reserve is computed, life, accident, or health contingencies.
(2) Reserves must be required by law
Except—
(A) in the case of policies covering life, accident, and health insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation, and
(B) as provided in paragraph (3),
in addition to the requirements set forth in paragraph (1), life insurance reserves must be required by law.
(3) Assessment companies
In the case of an assessment life insurance company or association, the term "life insurance reserves" includes—
(A) sums actually deposited by such company or association with State officers pursuant to law as guaranty or reserve funds, and
(B) any funds maintained, under the charter or articles of incorporation or association (or bylaws approved by a State insurance commissioner) of such company or association, exclusively for the payment of claims arising under certificates of membership or policies issued on the assessment plan and not subject to any other use.
(4) Amount of reserves
For purposes of this subsection, subsection (a), and subsection (c), the amount of any reserve (or portion thereof) for any taxable year shall be the mean of such reserve (or portion thereof) at the beginning and end of the taxable year.
(c) Total reserves defined
For purposes of subsection (a), the term "total reserves" means—
(1) life insurance reserves,
(2) unearned premiums, and unpaid losses (whether or not ascertained), not included in life insurance reserves, and
(3) all other insurance reserves required by law.
(d) Adjustments in reserves for policy loans
For purposes only of determining under subsection (a) whether or not an insurance company is a life insurance company, the life insurance reserves, and the total reserves, shall each be reduced by an amount equal to the mean of the aggregates, at the beginning and end of the taxable year, of the policy loans outstanding with respect to contracts for which life insurance reserves are maintained.
(e) Guaranteed renewable contracts
For purposes of this part, guaranteed renewable life, accident, and health insurance shall be treated in the same manner as noncancellable life, accident, and health insurance.
(f) Amounts not involving life, accident, or health contingencies
For purposes only of determining under subsection (a) whether or not an insurance company is a life insurance company, amounts set aside and held at interest to satisfy obligations under contracts which do not contain permanent guarantees with respect to life, accident, or health contingencies shall not be included in reserves described in paragraph (1) or (3) of subsection (c).
(g) Burial and funeral benefit insurance companies
A burial or funeral benefit insurance company engaged directly in the manufacture of funeral supplies or the performance of funeral services shall not be taxable under this part but shall be taxable under section 831.
(h) Treatment of deficiency reserves
For purposes of this section and section 842(b)(2)(B)(i), the terms "life insurance reserves" and "total reserves" shall not include deficiency reserves.
(Added
Prior Provisions
A prior section 816, act Aug. 16, 1954, ch. 736, §816, as added Mar. 13, 1956, ch. 83, §2,
Amendments
1988—Subsec. (g).
Subsec. (h).
1987—Subsec. (h).
1986—Subsec. (h).
Effective Date of 1988 Amendment
Amendment by section 1010(f)(6) of
Amendment by section 2004(q)(1) of
Effective Date of 1987 Amendment
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
Special Election To Treat Individual Noncancellable Accident and Health Contracts as Cancellable
"(1)
"(2)
"(3)
"(4)
"(A) on the return of the taxpayer for its first taxable year beginning after December 31, 1983, and
"(B) in such manner as the Secretary of the Treasury or his delegate may prescribe."
[
["(2)
["(3)
§817. Treatment of variable contracts
(a) Increases and decreases in reserves
For purposes of subsections (a) and (b) of section 807, the sum of the items described in section 807(c) taken into account as of the close of the taxable year with respect to any variable contract shall, under regulations prescribed by the Secretary, be adjusted—
(1) by subtracting therefrom an amount equal to the sum of the amounts added from time to time (for the taxable year) to the reserves separately accounted for in accordance with subsection (c) by reason of appreciation in value of assets (whether or not the assets have been disposed of), and
(2) by adding thereto an amount equal to the sum of the amounts subtracted from time to time (for the taxable year) from such reserves by reason of depreciation in value of assets (whether or not the assets have been disposed of).
The deduction allowable for items described in paragraphs (1) and (6) of section 805(a) with respect to variable contracts shall be reduced to the extent that the amount of such items is increased for the taxable year by appreciation (or increased to the extent that the amount of such items is decreased for the taxable year by depreciation) not reflected in adjustments under the preceding sentence.
(b) Adjustment to basis of assets held in segregated asset account
In the case of variable contracts, the basis of each asset in a segregated asset account shall (in addition to all other adjustments to basis) be—
(1) increased by the amount of any appreciation in value, and
(2) decreased by the amount of any depreciation in value,
to the extent such appreciation and depreciation are from time to time reflected in the increases and decreases in reserves or other items referred to in subsection (a) with respect to such contracts.
(c) Separate accounting
For purposes of this part, a life insurance company which issues variable contracts shall separately account for the various income, exclusion, deduction, asset, reserve, and other liability items properly attributable to such variable contracts. For such items as are not accounted for directly, separate accounting shall be made—
(1) in accordance with the method regularly employed by such company, if such method is reasonable, and
(2) in all other cases, in accordance with regulations prescribed by the Secretary.
(d) Variable contract defined
For purposes of this part, the term "variable contract" means a contract—
(1) which provides for the allocation of all or part of the amounts received under the contract to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the company,
(2) which—
(A) provides for the payment of annuities,
(B) is a life insurance contract, or
(C) provides for funding of insurance on retired lives as described in section 807(c)(6), and
(3) under which—
(A) in the case of an annuity contract, the amounts paid in, or the amount paid out, reflect the investment return and the market value of the segregated asset account,
(B) in the case of a life insurance contract, the amount of the death benefit (or the period of coverage) is adjusted on the basis of the investment return and the market value of the segregated asset account, or
(C) in the case of funds held under a contract described in paragraph (2)(C), the amounts paid in, or the amounts paid out, reflect the investment return and the market value of the segregated asset account.
If a contract ceases to reflect current investment return and current market value, such contract shall not be considered as meeting the requirements of paragraph (3) after such cessation. Paragraph (3) shall be applied without regard to whether there is a guarantee, and obligations under such guarantee which exceed obligations under the contract without regard to such guarantee shall be accounted for as part of the company's general account.
(e) Pension plan contracts treated as paying annuity
A pension plan contract which is not a life, accident, or health, property, casualty, or liability insurance contract shall be treated as a contract which provides for the payments of annuities for purposes of subsection (d).
(f) Other special rules
(1) Life insurance reserves
For purposes of subsection (b)(1)(A) of section 816, the reflection of the investment return and the market value of the segregated asset account shall be considered an assumed rate of interest.
(2) Additional separate computations
Under regulations prescribed by the Secretary, such additional separate computations shall be made, with respect to the items separately accounted for in accordance with subsection (c), as may be necessary to carry out the purposes of this section and this part.
(g) Variable annuity contracts treated as annuity contracts
For purposes of this part, the term "annuity contract" includes a contract which provides for the payment of a variable annuity computed on the basis of—
(1) recognized mortality tables, and
(2)(A) the investment experience of a segregated asset account, or
(B) the company-wide investment experience of the company.
Paragraph (2)(B) shall not apply to any company which issues contracts which are not variable contracts.
(h) Treatment of certain nondiversified contracts
(1) In general
For purposes of subchapter L, section 72 (relating to annuities), and section 7702(a) (relating to definition of life insurance contract), a variable contract (other than a pension plan contract) which is otherwise described in this section and which is based on a segregated asset account shall not be treated as an annuity, endowment, or life insurance contract for any period (and any subsequent period) for which the investments made by such account are not, in accordance with regulations prescribed by the Secretary, adequately diversified.
(2) Safe harbor for diversification
A segregated asset account shall be treated as meeting the requirements of paragraph (1) for any quarter of a taxable year if as of the close of such quarter—
(A) it meets the requirements of section 851(b)(3), and
(B) no more than 55 percent of the value of the total assets of the account are assets described in section 851(b)(3)(A)(i).
(3) Special rule for investments in United States obligations
To the extent that any segregated asset account with respect to a variable life insurance contract is invested in securities issued by the United States Treasury, the investments made by such account shall be treated as adequately diversified for purposes of paragraph (1).
(4) Look-through in certain cases
For purposes of this subsection, if all of the beneficial interests in a regulated investment company or in a trust are held by 1 or more—
(A) insurance companies (or affiliated companies) in their general account or in segregated asset accounts, or
(B) fund managers (or affiliated companies) in connection with the creation or management of the regulated investment company or trust,
the diversification requirements of paragraph (1) shall be applied by taking into account the assets held by such regulated investment company or trust.
(5) Independent investment advisors permitted
Nothing in this subsection shall be construed as prohibiting the use of independent investment advisors.
(6) Government securities funds
In determining whether a segregated asset account is adequately diversified for purposes of paragraph (1), each United States Government agency or instrumentality shall be treated as a separate issuer.
(Added
Prior Provisions
A prior section 817, added
Another prior section 817, act Aug. 16, 1954, ch. 736, §817, as added Mar. 13, 1956, ch. 83, §2,
Amendments
2004—Subsec. (c).
1997—Subsec. (h)(2)(A).
Subsec. (h)(2)(B).
1996—Subsec. (d)(2)(C).
Subsec. (d)(3)(C).
1988—Subsec. (h)(6).
1986—Subsec. (d).
Subsec. (h)(1).
Subsec. (h)(3) to (5).
Effective Date of 2004 Amendment
Amendment by
Effective Date of 1997 Amendment
Effective Date of 1996 Amendment
Effective Date of 1988 Amendment
Effective Date of 1986 Amendment
"(A) to contracts issued after December 31, 1986, and
"(B) to contracts issued before January 1, 1987, if such contract was treated as a variable contract on the taxpayer's return."
Amendment by section 1821(m) of
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of
Delay in Effective Date for Diversification Requirements With Respect to Accounts for Certain Immediate Annuities
"(1) such contract provides for the payment of an immediate annuity (as defined in section 72(u)(4) of the 1986 Code),
"(2) such contract was outstanding on September 12, 1986, and
"(3) the segregated asset account on which such contract is based was, on September 12, 1986, wholly invested in deposits insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation."
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of
§817A. Special rules for modified guaranteed contracts
(a) Computation of reserves
In the case of a modified guaranteed contract, clause (ii) of section 807(e)(1)(A) shall not apply.
(b) Segregated assets under modified guaranteed contracts marked to market
(1) In general
In the case of any life insurance company, for purposes of this subtitle—
(A) Any gain or loss with respect to a segregated asset shall be treated as ordinary income or loss, as the case may be.
(B) If any segregated asset is held by such company as of the close of any taxable year—
(i) such company shall recognize gain or loss as if such asset were sold for its fair market value on the last business day of such taxable year, and
(ii) any such gain or loss shall be taken into account for such taxable year.
Proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account under the preceding sentence. The Secretary may provide by regulations for the application of this subparagraph at times other than the times provided in this subparagraph.
(2) Segregated asset
For purposes of paragraph (1), the term "segregated asset" means any asset held as part of a segregated account referred to in subsection (d)(1) under a modified guaranteed contract.
(c) Special rule in computing life insurance reserves
For purposes of applying section 816(b)(1)(A) to any modified guaranteed contract, an assumed rate of interest shall include a rate of interest determined, from time to time, with reference to a market rate of interest.
(d) Modified guaranteed contract defined
For purposes of this section, the term "modified guaranteed contract" means a contract not described in section 817—
(1) all or part of the amounts received under which are allocated to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the company and is valued from time to time with reference to market values,
(2) which—
(A) provides for the payment of annuities,
(B) is a life insurance contract, or
(C) is a pension plan contract which is not a life, accident, or health, property, casualty, or liability contract,
(3) for which reserves are valued at market for annual statement purposes, and
(4) which provides for a net surrender value or a policyholder's fund (as defined in section 807(e)(1)).
If only a portion of a contract is not described in section 817, such portion shall be treated for purposes of this section as a separate contract.
(e) Regulations
The Secretary may prescribe regulations—
(1) to provide for the treatment of market value adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B),
(2) to determine the interest rates applicable under sections 807(c)(3), 807(d)(2)(B), and 812 with respect to a modified guaranteed contract annually, in a manner appropriate for modified guaranteed contracts and, to the extent appropriate for such a contract, to modify or waive the applicability of section 811(d),
(3) to provide rules to limit ordinary gain or loss treatment to assets constituting reserves for modified guaranteed contracts (and not other assets) of the company,
(4) to provide appropriate treatment of transfers of assets to and from the segregated account, and
(5) as may be necessary or appropriate to carry out the purposes of this section.
(Added
Effective Date
"(1)
"(2)
"(A) such changes shall be treated as a change in method of accounting initiated by the taxpayer,
"(B) such changes shall be treated as made with the consent of the Secretary, and
"(C) the adjustments required by reason of section 481 of the Internal Revenue Code of 1986, shall be taken into account as ordinary income by the taxpayer for the taxpayer's first taxable year beginning after December 31, 1995.
"(3)
"(A)
"(i)
"(I) the amount of life insurance reserves as of the close of the prior taxable year, over
"(II) the amount of such reserves as of the beginning of such first taxable year,
to the extent such excess is attributable to subsection (a) of such section 817A. Notwithstanding the preceding sentence, the adjusted basis of each segregated asset shall be determined as if all such losses were recognized.
"(ii)
"(B)
"(i)
"(ii)
"(iii)
"(I) the fair market value of the asset as of the beginning of the first taxable year of the taxpayer beginning after December 31, 1995, over
"(II) the adjusted basis of such asset as of such time."
§818. Other definitions and special rules
(a) Pension plan contracts
For purposes of this part, the term "pension plan contract" means any contract—
(1) entered into with trusts which (as of the time the contracts were entered into) were deemed to be trusts described in section 401(a) and exempt from tax under section 501(a) (or trusts exempt from tax under section 165 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws);
(2) entered into under plans which (as of the time the contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939;
(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (17), (19), (20), (22), (26), and (27) of section 401(a);
(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) (or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws), or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing;
(5) entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b); or
(6) purchased by—
(A) a governmental plan (within the meaning of section 414(d)) or an eligible deferred compensation plan (within the meaning of section 457(b)), or
(B) the Government of the United States, the government of any State or political subdivision thereof, or by any agency or instrumentality of the foregoing, or any organization (other than a governmental unit) exempt from tax under this subtitle, for use in satisfying an obligation of such government, political subdivision, agency or instrumentality, or organization to provide a benefit under a plan described in subparagraph (A).
(b) Treatment of capital gains and losses, etc.
In the case of a life insurance company—
(1) in applying section 1231(a), the term "property used in the trade or business" shall be treated as including only—
(A) property used in carrying on an insurance business, of a character which is subject to the allowance for depreciation provided in section 167, held for more than 1 year, and real property used in carrying on an insurance business, held for more than 1 year, which is not described in section 1231(b)(1)(A), (B), or (C), and
(B) property described in section 1231(b)(2), and
(2) in applying section 1221(a)(2), the reference to property used in trade or business shall be treated as including only property used in carrying on an insurance business.
(c) Gain on property held on December 31, 1958 and certain substituted property acquired after 1958
(1) Property held on December 31, 1958
In the case of property held by the taxpayer on December 31, 1958, if—
(A) the fair market value of such property on such date exceeds the adjusted basis for determining gain as of such date, and
(B) the taxpayer has been a life insurance company at all times on and after December 31, 1958,
the gain on the sale or other disposition of such property shall be treated as an amount (not less than zero) equal to the amount by which the gain (determined without regard to this subsection) exceeds the difference between the fair market value on December 31, 1958, and the adjusted basis for determining gain as of such date.
(2) Certain property acquired after December 31, 1958
In the case of property acquired after December 31, 1958, and having a substituted basis (within the meaning of section 1016(b))—
(A) for purposes of paragraph (1), such property shall be deemed held continuously by the taxpayer since the beginning of the holding period thereof, determined with reference to section 1223,
(B) the fair market value and adjusted basis referred to in paragraph (1) shall be that of that property for which the holding period taken into account includes December 31, 1958,
(C) paragraph (1) shall apply only if the property or properties the holding periods of which are taken into account were held only by life insurance companies after December 31, 1958, during the holding periods so taken into account,
(D) the difference between the fair market value and adjusted basis referred to in paragraph (1) shall be reduced (to not less than zero) by the excess of (i) the gain that would have been recognized but for this subsection on all prior sales or dispositions after December 31, 1958, of properties referred to in subparagraph (C), over (ii) the gain which was recognized on such sales or other dispositions, and
(E) the basis of such property shall be determined as if the gain which would have been recognized but for this subsection were recognized gain.
(3) Property defined
For purposes of paragraphs (1) and (2), the term "property" does not include insurance and annuity contracts and property described in paragraph (1) of section 1221(a).
(d) Insurance or annuity contract includes contracts supplementary thereto
For purposes of this part, the term "insurance or annuity contract" includes any contract supplementary thereto.
(e) Special rules for consolidated returns
(1) Items of companies other than life insurance companies
If an election under section 1504(c)(2) is in effect with respect to an affiliated group for the taxable year, all items of the members of such group which are not life insurance companies shall not be taken into account in determining the amount of the tentative LICTI of members of such group which are life insurance companies.
(2) Dividends within group
In the case of a life insurance company filing or required to file a consolidated return under section 1501 with respect to any affiliated group for any taxable year, any determination under this part with respect to any dividend paid by one member of such group to another member of such group shall be made as if such group was not filing a consolidated return.
(f) Allocation of certain items for purposes of foreign tax credit, etc.
(1) In general
Under regulations, in applying sections 861, 862, and 863 to a life insurance company, the deduction for policyholder dividends (determined under section 808(c)), reserve adjustments under subsections (a) and (b) of section 807, and death benefits and other amounts described in section 805(a)(1) shall be treated as items which cannot definitely be allocated to an item or class of gross income.
(2) Election of alternative allocation
(A) In general
On or before September 15, 1985, any life insurance company may elect to treat items described in paragraph (1) as properly apportioned or allocated among items of gross income to the extent (and in the manner) prescribed in regulations.
(B) Election irrevocable
Any election under subparagraph (A), once made, may be revoked only with the consent of the Secretary.
(3) Items described in section 807(c) treated as not interest for source rules, etc.
For purposes of part I of subchapter N, items described in any paragraph of section 807(c) shall be treated as amounts which are not interest.
(g) Qualified accelerated death benefit riders treated as life insurance
For purposes of this part—
(1) In general
Any reference to a life insurance contract shall be treated as including a reference to a qualified accelerated death benefit rider on such contract.
(2) Qualified accelerated death benefit riders
For purposes of this subsection, the term "qualified accelerated death benefit rider" means any rider on a life insurance contract if the only payments under the rider are payments meeting the requirements of section 101(g).
(3) Exception for long-term care riders
Paragraph (1) shall not apply to any rider which is treated as a long-term care insurance contract under section 7702B.
(Added and amended
References in Text
Section 165 of the Internal Revenue Code of 1939, referred to in subsec. (a)(1), (2), was classified to section 165 of former Title 26, Internal Revenue Code. Section 101 of the Internal Revenue Code of 1939, referred to in subsec. (a)(4) was classified to section 101 of former Title 26, Internal Revenue Code. Sections 101 and 165 were repealed by
Prior Provisions
A prior section 818, added
Another prior section 818, act Aug. 16, 1954, ch. 736, §818, as added Mar. 13, 1956, ch. 83, §2,
A prior section 819, added
A prior section 819A, added
A prior section 820, added
A prior section 821, acts Aug. 16, 1954, ch. 736,
A prior section 822 was renumbered
A prior section 823, added
Another prior section 823, act Aug. 16, 1954, ch. 736,
A prior section 824, added
A prior section 825, added
A prior section 826 was renumbered
Amendments
1999—Subsec. (b)(2).
Subsec. (c)(3).
1996—Subsec. (g).
1988—Subsec. (a)(6).
Subsec. (f)(3).
1986—Subsec. (a)(3).
Subsec. (a)(6)(A).
Subsec. (e).
1984—Subsec. (b)(1)(A).
Effective Date of 1999 Amendment
Amendment by
Effective Date of 1996 Amendment
"(1)
"(2)
"(A) the issuance of a qualified accelerated death benefit rider (as defined in section 818(g) of such Code (as added by this Act)), and
"(B) the addition of any provision required to conform an accelerated death benefit rider to the requirements of such section 818(g),
shall not be treated as a modification or material change of such contract."
Effective Date of 1988 Amendment
Amendment by section 1010(k) of
Effective Date of 1986 Amendment
Amendment by section 1106(d)(3)(C) of
Amendment by section 1112(d)(4) of
Amendment by section 1821(n), (o) of
Effective Date of 1984 Amendment
Amendment by
Regulations
Secretary of the Treasury or his delegate to issue before Feb. 1, 1988, final regulations to carry out amendments made by section 1112 of
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§1101–1147 and 1171–1177] or title XVIII [§§1800–1899A] of