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I. Tax on Life Insurance Companies (Original) -II. Life Insurance Company Tax Act for 1955..
--III. Chapter 1, Subchapter Q, Part I (Readjustment Between Years With
Respect to Income-Original) -----------
X. Chapter 51—Distilled Spirits, Wines, and Beer (Original) ---
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APPENDIX I: CH. 1, SUBCH. L, PART TAX ON LIFE INSUR
ANCE COMPANIES (ORIGINAL)
(68A Stat. 255-259)
PART E-LIFE INSURANCE COMPANIES 1
Sec. 807. Foreign life insurance companies.
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 health and accident insurance), or noncancellable contracts of health and accident insurance, if its life insurance reserves (as defined in section 803(b)), plus unearned premiums and inpaid losses on noncancellable life, health, or accident policies not included in life insurance reserves, comprise more than 50 percent of its total reserves. For purposes of this section, the term “total reserves" means life insurance reserves, unearned premiums and unpaid losses not included in life insurance reserves, and all other insurance reserves required by law. 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 section 802 but shall be taxable under section 821 or section 831. SEC, 802. IMPOSITION OF TAX,
(a) IN GENERAL.- Except as otherwise provided in subsection (b), there shall be imposed for each taxable year on the life insurance company taxable income of every life insurance company a ax consisting of a normal tax and a surtax computed as provided in section 11. For purposes of such tax, the term "life insurance company taxable income" means the taxable income (as lefined in section 803(g)) minus the reserve and other policy liability deduction provided in section 304 and plus the amount of the adjustment for certain reserves provided in section 806. For purposes of the surtax, such taxable income shall be computed without regard to the deduction provided in section 242 for partially tax-exempt interest.
(b) TAXABLE YEARS BEGINNING IN 1954.- In lieu of the tax imposed by subsection (a) there hall be imposed, for taxable years beginning in 1954, on the 1954 life insurance company taxable ncome (as defined in section 805) of every life insurance company a tax equal to the sum of the ollowing:
(1) 334 percent of the amount thereof not in excess of $200,000, plus
(2) 672 percent of the amount thereof in excess of $200,000. EC. 803. OTHER DEFINITIONS AND RULES (a) APPLICATION OF SECTION; GROSS INCOME.
(1) APPLICATION.—The definitions and rules contained in this section shall apply only in the case of life insurance companies.
(2) GROSS INCOME.—The term "gross income" means the gross amount of income received or accrued during the taxable year from interest, dividends, and rents.
(b) LIFE INSURANCE RESERVES.-The term "life insurance reserves" means amounts which ure computed or estimated on the basis of recognized mortality or morbidity tables and assumed ates of interest, and which are set aside to mature or liquidate, either by payment or reinsurance, uture unaccrued claims arising from life insurance, annuity, and noncancellable health and accilent insurance contracts (including life insurance or annuity contracts combined with noncanellable health and accident insurance) involving, at the time with respect to which the reserve is omputed, life, health, or accident contingencies. Such life insurance reserves, except in the case
f policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation and except as hereinfter provided in the case of assessment life insurance, must also be required by law. In the case f an assessment life insurance company or association, the term "life insurance reserves” includes ums actually deposited by such company or association with State or Territorial officers pursuant o law as guaranty or reserve funds, and any funds maintained, under the charter or articles of acorporation or association (or bylaws approved by a State insurance commissioner) of such
1 Part I of Subchapter L of Chapter 1 of the Internal Revenue Code of 1954 was completely evised by P.L. 84–429 (March 13, 1956), $ 2,70 Stat. 36–49. See Appendix II, p. 1267 below.
Appendix I-Continued 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.
(c) ADJUSTED RESERVES. The term "adjusted reserves" means life insurance reserves plus 7 percent of that portion of such reserves as are computed on a preliminary term basis.
(d) RESERVE EARNINGS RATE.—The term "reserve earnings rate" means a rate computed by adding 2.1125 percent (65 percent of 344 percent) to 35 percent of the average rate of interest assumed in computing life insurance reserves. Such average rate shall be calculated by multiplying each assumed rate of interest by the means of the amounts of the adjusted reserves computed at that rate at the beginning and end of the taxable year and dividing the sum of the products by the mean of the total adjusted reserves at the beginning and end of the taxable year.
(e) RESERVE FOR DEFERRED DIVIDENDS.—The term "reserve for deferred dividends" means sums held at the end of the taxable year as a reserve for dividends (other than dividends payable during the year following the taxable year) the payment of which is deferred for a period of not less than 5 years from the date of the policy contract. (f) INTEREST Paid.—The term "interest paid” means
(1) All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this chapter, and
(2) All amounts in the nature of interest, whether or not guaranteed, paid or accrued within the taxable year on insurance or annuity contracts (or contracts arising out of insurance or annuity contracts) which do not involve, at the time of payment or accrual, life, health, or accident contingencies.
(g) TAXABLE INCOME.—The term "taxable income" means the gross income less the following deductions:
(1) TAX-FREE INTEREST.-The amount of interest received or accrued during the taxable year which under section 103 is excluded from gross income.
(2) INVESTMENT EXPENSES.-Investment expenses paid or incurred during the taxable year. If any general expenses are in part assigned to or included in the investment expenses, the total deduction under this paragraph shall not exceed one-fourth of 1 percent of the mean of the book value of the invested assets held at the beginning and end of the taxable year plus one-fourth of the amount by which taxable income (computed without any deduction for investment expensts allowed by this paragraph, for tax-free interest allowed by paragraph (1), or for partially tarexempt interest and dividends received allowed by paragraph (5)) exceeds 3/4 percent of the book value of the mean of the invested assets held at the beginning and end of the taxable year.
(3) REAL ESTATE EXPENSES.—Taxes and other expenses paid or accrued during the taxable year exclusively on or with respect to the real estate owned by the company, not including taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and not including any amount paid out for new buildings, or for permanent improve ments or betterments made to increase the value of any property. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed on a shareholder of a company on his interest as shareholder, which are paid or accrued by the company without reimbursement from the shareholder, but in such cases no deduction shall be allowed the shareholder for the amount of such taxes.
(4) DEPRECIATION.—The depreciation deduction allowed by section 167.
(5) SPECIAL VEVUCTIONS.—The special deductions allowed by part VIII of subchapter B (except section 248).
(h) ŘENTAL VALUE OF REAL ESTATE.—The deduction under subsection (g) (3) and (4) on account of any real estate owned and occupied in whole or in part by a life insurance company shall be limited to an amount which bears the same ratio to such deduction (computed without regard to this subsection) as the rental value of the space not so occupied bears to the rental value of the entire priperty.
(i) AMORTIZATION OF PREMIUM AND ACCRUAL OF DISCOUNT.—The gross income, the deduction provided in subsection (g)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest) shall each be decreased to reflect the appropriate amortization of premium and increased to reflect 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
(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 or his delegate.
(j) DOUBLE DEVUCTIONS.—Nothing in this part shall permit the same item to be deducted more than once. SEC. 804. RESERVE AND OTHER POLICY LIABILITY DEDUCTION.
(a) IN GENERAL.- For purposes of this subpart, the term "reserve and other policy liability deduction" means an amount computed by multiplying the taxable income by a figure, to be determined and proclaimed by the Secretary or his delegate for each taxable year. This figure shall be based on such data with respect to life insurance companies for the preceding taxable year as the Secretary or his delegate considers representative and shall be computed in accordance
Appendix 1–Continued with the following formula: The ratio which a numerator comprised of the aggregate of the sums of
(1) 2 percent of the reserves for deferred dividends,
(A) the mean of the adjusted reserves at the beginning and end of the taxable year and
(B) the reserve earnings rate, bears to a denominator comprised of the aggregate of the excess of taxable incomes (computed without any deduction for tax-free interest, partially tax-exempt interest, or dividends received) over the adjustment for certain reserves provided in section 806.
(b) SURTAX COMPUTATION.-In determining the life insurance company taxable income for purposes of the surtax, the taxable income to be multiplied by the figure determined and proclaimed under subsection (a) shall be computed without regard to the deduction provided in section 242 for partially tax-exempt interest. SEC. 805. 1954 LIFE INSURANCE COMPANY TAXABLE INCOME.
(a) DEFINITION.–For purposes of section 802(b), the term “1954 life insurance company taxable income' means the taxable income (as defined in section 803(g)), plus 8 times the amount of the adjustment for certain reserves provided in section 806, and minus the reserve interest credit, if any, provided in subsection (b) of this section.
(b) RESERVE INTEREST CREDIT.–For purposes of subsection (a), the reserve interest credit shall be an amount determined as follows:
(1) Divide the amount of the adjusted taxable income (as defined in subsection (c)) by the amount of the required interest (as defined in subsection (d)).
(2) If the quotient obtained in paragraph (1) is 1.05 or more, the reserve interest credit shall be zero.
(3) If the quotient obtained in paragraph (1) is 1.00 or less, the reserve interest credit shall be an amount equal to 50 percent of the taxable income.
(4) If the quotient obtained in paragraph (1) is more than 1.00 but less than 1.05, the reserve interest credit shall be the amount obtained by multiplying the taxable income by 10 times the difference between the figures 1.05 and such quotient.
(c) ADJUSTED TAXABLE INCOME.—For purposes of subsection (b) (1), the term "adjusted taxable income" means the taxable income (computed without the deductions provided in section 803(g) (1) or (5)) minus 50 percent of the amount of the adjustment for certain reserves provided in section 806.
(d) REQUIRED INTEREST.–For purposes of subsection (b)(1), the term "required interest" means the total of
(1) the sum of the amounts obtained by multiplying
(A) each rate of interest assumed in computing the taxpayer's life insurance reserves by
(B) the means of the amounts of the taxpayer's adjusted reserves computed at that rate at the beginning and end of the taxable year, (2) 2 percent of the reserve for deferred dividends, and
(3) interest paid. SEC. 806. ADJUSTMENT FOR CERTAIN RESERVES.
In the case of a life insurance company writing contracts other than life insurance or annuity contracts (either separately or combined with noncancellable health and accident insurance), the term “adjustment for certain reserves" means an amount equal to 3/4 percent of the unearned premiums and unpaid losses on such other contracts which are not included in life insurance reserves (as defined in section 803(b)). For purposes of this section, such unearned premiums shall not be considered to be less than 25 percent of the net premiums written during the taxable year on such other contracts. SEC. 807. FOREIGN LIFE INSURANCE COMPANIES,
(a) CARRYING ON UNITED STATES INSURANCE BUSINESS.—A foreign life insurance company carrying on a life insurance business within the United States, if with respect to its United States business it would qualify as a life insurance company under section 801, shall be taxable in the same manner as a domestic life insurance company; except that the determinations necessary for purposes of this subtitle shall be made on the basis of the income, disbursements, assets, and liabilities reported in the annual statement for the taxable year of the United States business of such company on the form approved for life insurance companies by the National Association of Insurance Commissioners.
(b) No UNITED STATES INSURANCE BUSINESS.-Foreign life insurance companies not carrying on an insurance business within the United States shall not be taxable under this section but shall be taxable as other foreign corporations.