Page:United States Statutes at Large Volume 100 Part 3.djvu/748

 100 STAT. 2556

PUBLIC LAW 99-514—OCT. 22, 1986 (3) EXCEPTION FOR CERTAIN REINSURANCE CONTRACTS.—

(A) IN GENERAL.—In the case of the 1st 3 taxable years of a qualified controlled foreign insurer beginning after ' M, December 31, 1986, the amendments made by this section shall not apply to the phase-in percentage of any qualified reinsurance income. 9fi ri) (B) PHASE-IN PERCENTAGE.—For purposes of subparagraph (A): '*

In the case of taxable years beginning in: 1987 1988 1989

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The phase-in percentage is: 75 50 25.

(C) QUALIFIED CONTROLLED FOREIGN INSURER.—For

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' foreign insurer" means— (i) any controlled foreign corporation which on August 16, 1986, was a member of an affiliated group (as defined in section 1504(a) of the Internal Revenue Code of 1986 without regard to subsection (b)(3) thereof) ^ which had as its common parent a corporation incorporated in Delaware on July 9, 1967, with executive " offices in New York, New York, or (ii) any controlled foreign corporation which on August 16, 1986, was a member of an affiliated group (as so defined) which had as its common parent a "i« * ' ' corporation incorporated in Delaware on March 31, 1982, with executive offices in Philadelphia, Pennsylvania. (D) QUALIFIED REINSURANCE INCOME.—For purposes of this paragraph, the term 'qualified reinsurance income' -'Tit means any insurance income attributable to risks (other than risks described in section 953(a) or 954(e) of such Code as in effect on the day before the date of the enactment of this Act) assumed as of August 16, 1986, under a reinsurance contract in effect on such date. For purposes of the preceding sentence, insurance income shall mean the ikir, underwriting income (as defined in section 832(b)(3) of such Code) and investment income derived from an amount of assets (to be segregated and separately identified) equiva-nl lent to the ordinary and necessary insurance reserves and necessary surplus equal to Vs of earned premium attributable to such contracts. SEC. 1222. TESTING CONTROLLED FOREIGN CORPORATIONS AND FOREIGN PERSONAL HOLDING COMPANIES BY VALUE AND VOTING POWER. (a) DEFINITION OF CONTROLLED FOREIGN CORPORATION.—
 * ' poses of this paragraph, the term "qualified controlled

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(1) IN GENERAL.—Subsection (a) of section 957 (defining controlled foreign corporation) is amended to read as follows: "(a) GENERAL RULE.—For purposes of this subpart, the term 'controlled foreign corporation' means any foreign corporation if more than 50 percent of— "(1) the total combined voting power of all classes of stock of r>ii such corporation entitled to vote, or "(2) the total value of the stock of such corporation,

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