SEC. 815 (revised 1959)-Continued (a) (amended 1962)-Continued Do.... (2d & 3d sen'ces deleted) (b) (2) ((A)(2), in part) Applicability: Taxable years beginning after December 31, 1961. (Id., § 3(f), 76 Stat. 1138. See n. 208, p. 343 above.) Sept. 2, 1964, H.R. 5739, P.L. 88-571, § 4(a), 78 Stat. 859: Amended Sec. 815(a) (as amended by P.L. 87-858, § 3(e)) by striking out the second and third sentences. Sept. 2, 1964, H R. 5739, P.L. 88-571, § 2, 78 Stat. 857: Amended Sec. 815(b) (2) 222 by adding at the end of subparagraph (A) (ii) the following: "reduced (in the case of a taxable year beginning after December 31, 1961) by the amount referred to in clause (i),”. Applicability: Indicated by the terms of the amendment. (c) (2) (C).......... Oct. 10, 1962, H.R. 12180, P.L. 87-790, § 3(b), 76 Stat. 808-809: Amended Sec. 815(c) (2) 223 (as enacted by P.L. 86-69, § 2(a)) by striking out in Subparagraph (C)— "group life and group accident and health insurance contracts" and inserting in lieu thereof "accident and health insurance and group life insurance contracts". Applicability: Taxable years beginning after December 31, 1962. (Id., § 3(c), 76 Stat. 809.) 222 Paragraph (2) of Section 815(b) (relating to shareholders surplus account as enacted by P.L. 86-69, § 2(a)) originally read as follows (73 Stat. 129): "(2) ADDITIONS TO ACCOUNT.-The amount added to the shareholders surplus account for any taxable year beginning after December 31, 1957, shall be the amount by which "(A) the sum of— "(i) the life insurance company taxable income (computed without regard to section 802(b)(3)), "(ii) in case of a taxable year beginning after December 31, 1958, the amount (if any) by which the net long-term capital gain exceeds the net short-term capital loss, "(iii) the deduction for partially tax-exempt interest provided by section 242 (as modified by section 804(a)(3)), the deductions for dividends received provided by sections 243, 244, and 245 (as modified by section 809 (d) (8) (B)), and the amount of interest excluded from gross income under section 103, and "(iv) the small business deduction provided by section 809(d) (10), exceeds "(B) the taxes imposed for the taxable year by section 802(a), determined without regard to section 802(b)(3).” 223 Paragraph (2) of section 815(c) (policyholders surplus account-as enacted by P.L. 86-69, § 2(a)) read as follows (73 Stat. 129-130): "(2) ADDITIONS TO ACCOUNT.-The amount added to the policyholders surplus account for any taxable year beginning after December 31, 1958, shall be the sum of— "(A) an amount equal to 50 percent of the amount by which the gain from operations exceeds the taxable investment income. "(B) the deduction for certain nonparticipating contracts provided by section 809 (d) (5) (as limited by section 809 (f)), and "(C) the deduction for group life and group accident and health insurance contracts provided by section 809(d) (6) (as limited by section 809(f)).” SEC. 815 (revised 1959)-Continued (c) (3) (B)... (d) (5) (f). (added) Oct. 23, 1962, H.R. 8952, P.L. 87-858, § 3(b) (4), 76 Stat. 1137: Amended Sec. 815(c) (3) 224 (as enacted by P.L. 86-69, § 2(a)) by striking out in Subparagraph (B)— "802(a)(1)" and inserting in lieu thereof "802(a)". Applicability: Taxable years beginning after December 31, 1961. (Id., § 3(f), 76 Stat. 1138. See n. 208, p. 343 above.) Sept. 2, 1964, H.R. 5739, P.L. 88-571, § 3(a), 78 Stat. 857: Amended Sec. 815(d) (relating to special rules with respect to distributions to shareholders-as enacted by P.L. 86-69, § 2(a)) by adding at the end thereof the following new paragraph (5): "(5) REDUCTION OF POLICYHOLDERS SURPLUS ACCOUNT FOR CERTAIN UNUSED DEDUCTIONS.-If "(A) an amount added to the policyholders surplus account for any taxable year increased (or created) a loss from operations for such year, and "(B) any portion of the increase (or amount created) in the loss from operations referred to in subparagraph (A) did not reduce the life insurance company taxable income for any taxable year to which such loss was carried, the policyholders surplus account for the taxable year referred to in subparagraph (A) shall be reduced by the amount described in subparagraph (B)." Applicability: Amounts added to policyholders surplus accounts (within the meaning of section 815(c) of the 1954 Code) for taxable years beginning after December 31, 1958. (Id., § 3(f), 78 Stat. 859.) Sept. 2, 1964, H.R. 5739, P.L. 88-571, § 4(a)(2), 78 Stat. 859-860: Amended Sec. 815 (as enacted by P.L. 86-69, § 2(a)) by adding at the end thereof the following new subsection (f): "(f) DISTRIBUTION DEFINED.-For purposes of this section, the term 'distribution' includes any distribution in redemption of stock or in partial or complete liquidation of the corporation, but does not include "(1) any distribution made by the corporation in its stock or in rights to acquire its stock; "(2) except for purposes of subsection (a) (3) and subsection (e) (2) (B), any distribution in redemption of stock issued before 1958 which at all times on and after the date of issuance and on and before the date of redemption is limited as to dividends and is callable, at the option of the issuer, at a price not in excess of 105 percent of the sum of the issue price and the amount of any contribution to surplus made by the original purchaser at the time of his purchase; or 224 Paragraph (3) of section 815(c) (policyholders surplus account-as enacted by P.L. 86-69, § 2(a)) read as follows (73 Stat. 130): "(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 (determined without regard to section 802 (a) (3)) by which the tax imposed for the taxable year by section 802 (a) (1) is increased by reason of section 802 (b) (3).” SEC. 815 (revised 1959)-Continued (f) (added 1964)-Continued "(3) any distribution after December 31, 1963, of the stock of a controlled corporation to which section 355 applies, if such controlled corporation is an insurance company subject to the tax imposed by section 831 and if "(A) control was acquired prior to January 1, 1958, or "(ii) solely in exchange for stock of the distributing corporation which stock is immediately exchanged by the controlled corporation in a transaction qualifying as a reorganization under section 368(a)(1) (A) or (C), if the controlled corporation has at all times since its organization been wholly owned by the distributing corporation and the distributing corporation has at all times since December 31, 1957, owned stock representing not less than 50 percent of the total combined voting power of all classes of stock entitled to vote, and not less than 50 percent of the value of all classes of stock, of the corporation the assets of which have been transferred to the controlled corporation in the section 368(a) (1) (A) or (C) reorganization. Paragraph (3) shall not apply to that portion of the distribution of stock of the controlled corporation equal to the increase in the aggregate adjusted basis of such stock after December 31, 1957, except to the extent such increase results from an acquisition of stock in the controlled corporation in a transaction described in subparagraph (B) of such paragraph. If any part of the increase in the aggregate adjusted basis of stock of the controlled corporation after December 31, 1957, results from the transfer (other than as part of a transaction described in paragraph (3) (B)) by the distributing corporation to the controlled corporation of property which has a fair market value in excess of its adjusted basis at the time of the transfer, paragraph (3) also shall not apply to that portion of the distribution equal to such excess." CH. 1, SUBCH. L, PART I, SUBPART E-MISCELLANEOUS PROVISIONS (Revised 1959-73 Stat. 132, ff.): NOTE: The table of sections for Subpart E of Part I of Subchapter L of Chapter 1 (as enacted by P.L. 86-69, § 2(a)) reads as follows (73 Stat. 132): "Sec. 817. Rules relating to certain gains and losses. "Sec. 818. Accounting provisions. "Sec. 819. Foreign life insurance companies. "Sec. 820. Optional treatment of policies reinsured under modified coinsurance contracts." This table has not been amended. 60-448-67– -24 SEC. 818. ACCOUNTING PROVISIONS (Revised 1959-73 Stat. 133 (b) (3) _ (added) 135): Feb. 26, 1964, H.R. 8363, P.L. 88–272, § 228(b)(1), 78 Stat. 98-99: Amended Sec. 818(b) (relating to amortization of premium and accrual of discount-as enacted by P.L. 86-69, § 2(a)) by adding at the end thereof, after paragraph (2) (special rules), the following new paragraph (3): "(3) EXCEPTION. For taxable years beginning after December 31, 1962, 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 1232(b)). For purposes of section 805(b)(3)(A), the current earnings rate for any taxable year beginning before January 1, 1963, shall be determined as if the preceding sentence applied to such taxable year." Applicability: Taxable years beginning after December 31, 1962-as provided in the new paragraph (3). CH. 1, SUBCH. L, PART II-MUTUAL INSURANCE COMPANIES (OTHER THAN LIFE OR MARINE OR FIRE INSURANCE COMPANIES ISSUING PERPETUAL POLICIES) (Original-68A Stat. 260-264): NOTE: The table of sections for Part II of Subchapter L of Chapter 1 originally read as follows (68A Stat. 260): "Sec. 821. Tax on mutual insurance companies (other than life or marine or fire insurance companies issuing perpetual policies.) "Sec. 822. Determination of mutual insurance company taxable income. "Sec. 823. Other definitions.' For the amendment of such Part II by P.L. 87-834, § 8(a), see p. 360 below. SEC. 821. TAX ON MUTUAL INSURANCE COMPANIES (OTHER THAN LIFE OR MARINE OR FIRE INSURANCE COMPANIES ISSUING PERPETUAL POLICIES) (Original68A Stat. 260-261): (a) (1) (A) (dates changed) Mar. 30, 1955, H.R. 4259, P.L. 84-18, § 2, 69 Stat. 14: Amended Sec. 821(a)(1)(A) 225 (relating to tax on mutual companies other than intersurers)-- (1) by striking out in the heading and in the text of clause (i) (relating to taxable years for which the 30 percent or 60 percent rate applied) "April 1, 1955" and inserting in lieu thereof "April 1, 1956"; and 225 Section 821 originally read as follows (68A Stat. 260-261): "SEC. 821. TAX ON MUTUAL INSURANCE COMPANIES (OTHER THAN LIFE OR MARINE OR FIRE INSURANCE COMPANIES ISSUING PERPETUAL POLICIES) "(a) IMPOSITION OF TAX ON MUTUAL COMPANIES OTHER THAN INTERINSURERS.-There shall be imposed for each taxable year on the income of every mutual insurance company (other than a life or a marine insurance company or a fire insurance company subject to the tax imposed by section [Footnote 225 continued on following page] SEC. 821 (original)—Continued (a)(1)(A) (amended 1955)-Continued (2) by striking out in the heading and in the text of clause (ii) (relating to taxable years for which the 25 percent or 50 percent rate applied) "March 31, 1955" and inserting in lieu thereof "March 31, 1956". Applicability: Indicated by the terms of the amendment. Footnote 225—Continued 831 and other than an interinsurer or reciprocal underwriter) a tax computed under paragraph (1) or paragraph (2), whichever is the greater: "(1) If the mutual insurance company taxable income (computed without regard to the deduction provided in section 242 for partially tax-exempt interest) is over $3,000, a tax computed as follows: "(A) NORMAL TAX.— "(i) TAXABLE YEARS BEGINNING BEFORE APRIL 1, 1955. In the case of taxable years beginning before April 1, 1955, a normal tax of 30 percent of the mutual insurance company taxable income, or 60 percent of the amount by which such taxable income exceeds $3,000, whichever is the lesser; "(ii) TAXABLE YEARS BEGINNING AFTER MARCH 31, 1955.-In the case of taxable years beginning after March 31, 1955, a normal tax of 25 percent of the mutual insurance company taxable income, or 50 percent of the amount by which such taxable income exceeds $3,000, whichever is the lesser; plus "(B) SURTAX.-A surtax of 22 percent of the mutual insurance company taxable income (computed without regard to the deduction provided in section 242 for partially tax-exempt interest) in excess of $25,000. "(2) If for the taxable year the gross amount of income from interest, dividends, rents, and net premiums, minus dividends to policyholders, minus the interest which under section 103 is excluded from gross income, exceeds $75,000, a tax equal to 1 percent of the amount so computed, or 2 percent of the excess of the amount so computed over $75,000, whichever is the lesser. "(b) IMPOSITION OF TAX ON INTERINSURERS.-În the case of every mutual insurance company which is an interinsurer or reciprocal underwriter (other than a life or a marine insurance company or a fire insurance company subject to the tax imposed by section 831), if the mutual insurance company taxable income (computed as provided in subsection (a)(1)) is over $50,000, there shall be imposed for each taxable year on the mutual insurance company taxable income a tax computed as follows: "(1) NORMAL TAX.— "(A) TAXABLE YEARS BEGINNING BEFORE APRIL 1, 1955.-In the case of taxable years beginning before April 1, 1955, a normal tax of 30 percent of the mutual insurance company taxable income, or 60 percent of the amount by which such taxable income exceeds $50,000, whichever is the lesser; "(B) TAXABLE YEARS BEGINNING AFTER MARCH 31, 1955.-In the case of a taxable year beginning after March 31, 1955, a normal tax of 25 percent of the mutual insurance company taxable income, or 50 percent of the amount by which such taxable income exceeds $50,000, whichever is the lesser; plus "(2) SURTAX.-A surtax of 22 percent of the mutual insurance company taxable income (computed as provided in subsection (a)(1)) in excess of $25,000, or 33 percent of the amount by which such taxable income exceeds $50,000, whichever is the lesser. "(c) GROSS AMOUNT RECEIVED, OVER $75,000 BUT LESS THAN $125,000.-If the gross amount received during the taxable year from interest, dividends, rents, and premiums (including deposits and assessments) is over $75,000 but less than $125,000, the tax imposed by subsection (a) or subsection (b), whichever applies, shall be reduced to an amount which bears the same proportion to the amount of the tax determined under such subsection as the excess over $75,000 of such gross amount received bears to $50,000. "(d) No UNITED STATES INSURANCE BUSINESS.-Foreign mutual insurance companies (other than a life or marine insurance company or a fire insurance company subject to the tax imposed by section 831) not carrying on an insurance business within the United States shall not be subject to this part but shall be taxable as other foreign corporations. "(e) ALTERNATIVE TAX ON CAPITAL GAINS. "For alternative tax in case of capital gains, see section 1201(a).” The foregoing amendment and those immediately following apply to the original section 821 as existing prior to the revision of Part II of Subchapter L of Chapter 1 by P.L. 87-834, § 8(a), p. 360 below. |