Page:United States Statutes at Large Volume 101 Part 2.djvu/1213

 PUBLIC LAW 100-203—DEC. 22, 1987

101 STAT. 1330-419

(b) TECHNICAL AMENDMENTS.—Paragraph (1) of section 901(j) is

amended— (1) by striking out "to which" in subparagraph (A) and inserting in lieu thereof "during which", and (2) by striking out "any country so identified" and inserting in lieu thereof "such country". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 901 note, apply to taxable years beginning after December 31, 1987.

PART V—INSURANCE PROVISIONS SEC. 10241. INTEREST RATE USED IN COMPUTING TAX RESERVES FOR LIFE INSURANCE COMPANIES MAY NOT BE LESS THAN AP'^^PLICABLE FEDERAL RATE.

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(a) IN GENERAL.—Subparagraph (B) of section 807(d)(2) (relating to method of computing reserves for purposes of determining income) is amended to read as follows: "(B) the greater of— ^, "(i) the applicable Federal interest rate, or "(ii) the prevailing State assumed interest rate, and". (b) APPLICABLE FEDERAL INTEREST RATE.—

(1) IN GENERAL.—Paragraph (4) of section 807(d) (defining State assumed interest rate) is amended to read as follows: "(4) APPLICABLE FEDERAL INTEREST RATE; PREVAILING STATE

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ASSUMED INTEREST RATE.—For purposes of this subsection— "(A) APPLICABLE FEDERAL INTEREST RATE.— "(i) IN GENERAL.—Except as provided in clause (ii), the term 'applicable Federal interest rate' means the annual rate determined by the Secretary under section 846(c)(2) for the calendar year in which the contract was issued. "(ii) ELECTION TO RECOMPUTE FEDERAL INTEREST RATE

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"(II) RECOMPUTATION PERIOD.—For purposes of

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EVERY 5 YEARS.— "(I) IN GENERAL.—In computing the amount of the reserve with respect to any contract to which an election under this clause applies for periods during any recomputation period, the applicable Federal interest rate shall be the annual rate determined by the Secretary under section 846(c)(2) for the 1st year of such period. N o change in the applicable Federal interest rate shall be made under the preceding sentence unless such change would equal or exceed V2 of 1 percentage point. subclause (I), the term 'recomputation period' means, with respect to any contract, the 5 calendar year period beginning with the 5th calendar year beginning after the calendar year in which the contract was issued (and each subsequent 5 calendar year period). "(Ill) ELECTION.—An election under this clause shall apply to all contracts issued during the calendar year for which the election was made or during any subsequent calendar year unless such election is revoked with the consent of the Secretary.

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