Page:United States Statutes at Large Volume 111 Part 1.djvu/978

 Ill STAT. 954 PUBLIC LAW 105-34—AUG. 5, 1997 for interest (within the meaning of section 265(b)(4)) for the taxable year (determined without regard to this subsection, section 265(b), and section 291). " (8) AGGREGATION RULES.— "(A) IN GENERAL. —A ll members of a controlled group (within the meaning of subsection (d)(5)(B)) shall be treated as 1 taxpayer for purposes of this subsection. "(B) TREATMENT OF INSURANCE COMPANIES.— Th is subsection shall not apply to an insurance company subject to tax under subchapter L, and subparagraph (A) shall be applied without regard to any member of an affiliated group which is an insurance company.", (b) TREATMENT OF INSURANCE COMPANIES.— (1)(A) Clause (ii) of section 805(a)(4)(C) is amended by inserting ", or out of the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies," after "tax-exemjjt interest". (B) Clause (iii) of section 805(a)(4)(D) is amended by striking "and" and inserting ", the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, and". (C) Paragraph (4) of section 805(a) is amended by adding at the end the following new subparagraph: "(F) INCREASE IN POLICY CASH VALUES.—For purposes of subparagraphs (C) and (D)— "(i) IN GENERAL. —The increase in the policy cash value for any taxable year with respect to policy or contract is the amount of the increase in the adjusted cash value during such taxable year determined without regard to— "(I) gross premiums paid during such taxable year, and "(II) distributions (other than amounts includible in the policyholder's gross income) during such taxable year to which section 72(e) applies, "(ii) ADJUSTED CASH VALUE.— For purposes of clause (i), the term 'adjusted cash value' means the cash surrender value of the policy or contract increased by the sum of— "(I) commissions payable with respect to such policy or contract for the taxable year, and "(II) asset management fees, surrender charges, mortality and expense charges, and any other fees or charges specified in regulations prescribed by the Secretary which are imposed (or which would be imposed were the policy or contract canceled) with respect to such policy or contract for the taxable year.". (2)(A) Subparagraph (B) of section 807(a)(2) is amended by striking "interest," and inserting "interest and the amount of the policyholder's share of the increase for the taxable year in policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies,".

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