Page:United States Statutes at Large Volume 100 Part 3.djvu/582

 100 STAT. 2390

PUBLIC LAW 99-514—OCT. 22, 1986 (A) by striking out "the special deductions under section 806" and inserting in lieu thereof "the small life insurance company deduction under sectiorf 806(a)", and (B) by adding at the end thereof the following: "For purposes of determining taxable income, the amount of any income, gain, loss, or deduction attributable to the ownership of such stock shall be an amount equal to 46 times the amount of such income, gain, loss, or deduction, divided by 36.8." (d) TREATMENT OF CERTAIN MARKET DISCOUNT BONDS.—

f 1) IN GENERAL.—Notwithstanding the amendments made by subtitle B of title III, any gain recognized by a qualified life insurance company on the redemption at maturity of any bond which was issued before July 19, 1984, and acquired by such company on or before September 25, 1985, shall be subject to tax at the rate of 28 percent. (2) QUALIFIED LIFE INSURANCE COMPANY.—For purposes of paragraph (1), the term "qualified life insurance company" means any of the following companies: Aetna, Provident Life and Accident, Massachusetts Mutual, Mutual Benefit, Connecticut Mutual, Phoenix Mutual, John Hancock, New England Life, Pennsylvania Mutual, Transamerica, Northwestern, Provident Mutual, Prudential, Mutual of Omaha, and Metropolitan. SEC. 1012. REPEAL OF TAX-EXEMPT STATUS FOR CERTAIN ORGANIZATIONS PROVIDING COMMERCIAL-TYPE INSURANCE,

(a) IN GENERAL.—Section 501 (relating to exemption from tax on corporations, certain trusts, etc.) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (1) the following new subsection: "(m) CERTAIN ORGANIZATIONS PROVIDING COMMERCIAL-TYPE INSURANCE NOT EXEMPT FROM TAX.— "(1) DENIAL OF TAX EXEMPTION WHERE PROVIDING COMMERCIALTYPE INSURANCE IS SUBSTANTIAL PART OF ACTIVITIES.—An

organization described in paragraph (3) or (4) of subsection (c) shall be exempt from tax under subsection (a) only if no substantial part of its activities consists of providing commercial-type insurance. "(2) OTHER ORGANIZATIONS TAXED AS INSURANCE COMPANIES ON

INSURANCE BUSINESS.—In the case of an organization described in paragraph (3) or (4) of subsection (c) which is exempt from tax under subsection (a) after the application of paragraph (1) of this subsection— "(A) the activity of providing commercial-type insurance shall be treated as an unrelated trade or business (as defined in section 513), and "(B) in lieu of the tax imposed by section 511 with respect to such activity, such organization shall be treated as an insurance company for purposes of applying subchapter L with respect to such activity. "(3) COMMERCIAL-TYPE INSURANCE.—For purposes of this subsection, the term 'commercial-type insurance' shall not include— "(A) insurance provided at substantially below cost to a class of charitable recipients.

�