Page:United States Statutes at Large Volume 100 Part 3.djvu/598

 100 STAT. 2406

PUBLIC LAW 99-514—OCT. 22, 1986 "(II) subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply. "(c) CROSS REFERENCES.— "(1) For alternative tax in case of capital gains, see section 1201(a). "(2) For taxation of foreign corporations carrying on an insurance business within the United States, see section 842. "(3) For exemption from tax for certain insurance companies other than life, see section 501(c)(15)." REVISION OF EXEMPTION FROM TAX.—Paragraph (15) of section

(b) 501(c) (relating to list of exempt organizations) is amended to read as follows: "(15)(A) Insurance companies or associations other than life (including interinsurers and reciprocal underwriters) if the net written premiums (or, if greater, direct written premiums) for the taxable year do not exceed $350,000. "(B) For purposes of subparagraph (A), in determining whether any company or association is described in subparagraph (A), such company or association shall be treated as receiving during the taxable year amounts described in subparagraph (A) which are received during such year by all other companies or associations which are members of the same controlled group as the insurance company or association for which the determination is being made. "(C) For purposes of subparagraph (B), the term 'controlled group' has the meaning given such term by section 831(b)(2)(B)(ii)." (c) CONFORMING AMENDMENTS.—

(1) Subparagraph (C) of section 832(b)(1) is amended by striking out "a mutual fire insurance company described in section 831(a)(3)(A)" and inserting in lieu thereof "a mutual fire insurance company exclusively issuing perpetual policies". (2) Subparagraph (D) of section 832(b)(1) is amended to read as follows: "(D) in the case of a mutual fire or flood insurance company whose principal business is the issuance of policies— "(i) for which the premium deposits are the same (regardless of the length of the term for which the policies are written), and "(ii) under which the unabsorbed portion of such premium deposits not required for losses, expenses, or establishment of reserves is returned or credited to the policyholder on cancellation or expiration of the policy, an amount equal to 2 percent of the premiums earned on insurance contracts during the taxable year with respect to such policies after deduction of premium deposits returned or credited during the same taxable year, and". (3) Paragraph (4) of section 8320t)) is amended— (A) by striking out "section 831(a)(3)(B)" each place it appears and inserting in lieu thereof "paragraph (1)(D)", and (B) by striking out the last sentence and inserting in lieu thereof the following: "Premiums paid by the subscriber of a mutual flood insurance company described in paragraph (1)(D) or issuing exclusively perpetual policies shall be treated, for purposes of computing the taxable income of such subscriber, in the same manner as premiums paid by a

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