Page:United States Statutes at Large Volume 68A.djvu/296

 256

INTERNAL REVENUE CODE OF 1954

(as defined in section 805) of every life insurance company a tax equal to the sum of the following: (1) 3% percent of the amount thereof not in excess of $200,000, plus (2) 6)^ percent of the amount thereof in excess of $200,000. SEC. 803. OTHER DEFINITIONS AND RULES. (a) APPLICATION OF SECTION; GROSS INCOME.—

(1) APPLICATION.—The definitions and rules contained in this section shall apply only in the case of life insurance companies. (2) GROSS INCOME.—The term "gross income" means the gross amount of income received or accrued during the taxable year from interest, dividends, and rents. (b) L I F E INSURANCE R E S E R V E S. — The term "life insurance reserves" means amounts which are computed or estimated on the basis of recognized mortality or morbidity tables and assumed rates of interest, and which are set aside to mature or liquidate, either by payment or reinsurance, future unaccrued claims arising from life insurance, annuity, and noncancellable health and accident insurance contracts (including life insurance or annuity contracts combined with noncancellable health and accident insurance) involving, at the time with respect to which the reserve is computed, life, health, or accident contingencies. Such life insurance reserves, except in the case of policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation and except as hereinafter provided in the case of assessment life insurance, must also be required by law. In the case of an assessment life insurance company or association, the term "life insurance reserves" includes sums actually deposited by such company or association with State or Territorial officers pursuant to law as guaranty or reserve funds, and any funds maintained, under the charter or articles of incorporation or association (or bylaws approved by a State insurance commissioner) of such company or association, exclusively for the payment of claims arising under certificates of membership or policies issued on the assessment plan and not subject to any other use. (c) ADJUSTED R E S E R V E S. — The term "adjusted reserves" means life insurance reserves plus 7 percent of that portion of such reserves as are computed on a preliminary term basis. (d) R E S E R V E EARNINGS R A T E. — The term "reserve earnings r a t e " means a rate computed by adding 2.1125 percent (65 percent of SVi percent) to 35 percent of the average rate of interest assumed in computing life insurance reserves. Such average rate shall be calculated by multiplying each assumed rate of interest by the means of the amounts of the adjusted reserves computed at that rate at the beginning and end of the taxable year and dividing the sum of the products by the mean of the total adjusted reserves at the beginning and end of the taxable year. (e) R E S E R V E FOR D E F E R R E D DIVIDENDS.—The term "reserve for deferred dividends" means sums held at the end of the taxable year as a reserve for dividends (other than dividends payable during the

802(b)

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