Page:United States Statutes at Large Volume 100 Part 3.djvu/587

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2395

SEC. 1013. OPERATIONS LOSS DEDUCTION OF INSOLVENT COMPANIES MAY OFFSET DISTRIBUTIONS FROM POLICYHOLDERS SURPLUS ACCOUNT. (a) IN GENERAL.—If—

(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), 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) DEFINITIONS.—For purposes of subsection (a)— (1) INSOLVENT.—The term "insolvent" means the excess of liabilities over the fair market value of assets. (2) Loss FROM OPERATIONS.—The term "loss from operations" has the meaning given such term by section 810(c) of such Code. (c) EFFECTIVE DATE.—This section shall apply to liquidations on or after November 15, 1985, in taxable years ending after such date.

Subtitle C—Property and Casualty Insurance Companies SEC. 1021. INCLUSION IN INCOME OF 20 PERCENT OF UNEARNED PREMIUM RESERVE.

(a) IN GENERAL.—The first sentence of paragraph (4) of section 832(b) (defining premiums earned) is amended by striking out subparagraph (B) and inserting in lieu thereof the following: "(B) To the result so obtained, add 80 percent of the unearned premiums on outstanding business at the end of the preceding taxable year and deduct 80 percent of the unearned premiums on outstanding business at the end of the taxable year. "(C) To the result so obtained, in the case of a taxable year beginning after December 31, 1986, and before January 1, 1993, add an amount equal to dVs percent of unearned premiums on outstanding business at the end of the most recent taxable year beginning before January 1, 1987." (b) SPECIAL RULES.—Subsection (b) of section 832 is amended by adding at the end thereof the following new paragraph: "(7) SPECIAL RULES FOR APPLYING PARAGRAPH (4).— "(A) REDUCTION NOT TO APPLY TO LIFE INSURANCE RE-

SERVES.—Subparagraph (B) of paragraph (4) shall be applied with respect to amounts included in unearned premiums

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