Page:United States Statutes at Large Volume 70.djvu/95

 70 S T A T. ]

PUBLIC LAW 429-MAR. 13, 1966

to the amount of the deduction provided by section 242 for partially tax-exempt interest as (A) the sum of the life insurance taxable income and the net investment income allocable to nonlife insurance reserves bears to (B) the net investment income. "(2) COMPUTATIONS UNDER.sriiSECTioN (c)(2)(A).—In computing the normal tax for purposes of subsection (c)(2)(A), there shall be allowed as a deduction an amount which bears the same ratio to the amount of the deduction provided by section 242 for partially tax-exempt interest as (A) the life insurance taxable income bears to (B) the net investment income. "(e) ALTERNATIVE TAX ON CAPITAL (TAINS.—In the case of a life insurance company which has non-life insurance reserves, the term 'excess' used in section 1201(a) (relating to alternative tax on capital gains of corporations) means, for purposes of section 1201(a), an amount which bears the same ratio to the excess described in such section as the non-life insurance reserves (determined under section 804 (d)) bear to the qualified reserves (determined under section 804 (c)). For purposes of any such computation, a net capital loss for any taxable year beginning befoie January 1, 1955, shall not be taken into account. "(f) N O N - L I F E INSURANCE TAXABLE INCOME DEFINED.—For purposes of this subpart, the term 'non-life insurance taxable income" means the net investment income allocable to non-life insurance reserves (determined under section 804(d)) — "(1) increased by an amount which bears the same ratio to the net capital gain as the non-life insurance reserves bear to the qualified reserves; and "(2) decreased by an amount which bears the same ratio to the total of the deductions provided in sections 243, 244, and 245 as the non-life insurance reserves bear to the qualified reserves. I n computing a net capital gain for purposes of paragraph (1) of this subsection, a net capital loss for any taxable year beginning before January 1, 1955, shall not be taken into account. "SEC. 803. INCOME AND DEDUCTIONS. " (a) APPLICATION OF SECTION.—The

definitions and rules contained in this section shall apply only in the case of life insurance companies. "(b) GROSS INVESTMENT INCOME.—For purposes of this part, the term 'gross investment income' means the sum of the following: " (1) The gross amount of income received or accrued from— " (A) interest, dividends, rents, and royalties, " (B) the entering into of any lease, mortgage, or other instrument or agreement from which the life insurance company derives interest, rents, or royalties, and " (C) the alteration or termination of any instrument or agreement described in subparagraph (B). "(2) The gross income from any trade or business (other than an insurance business) carried on by the life insurance company, or by a partnership of which the life insurance company is a partner. In computing gross income under this paragraph, there shall be excluded any item described in paragraph (1). In computing gross investment income under this subsection, there shall be excluded any gain from the sale or exchange of a capital asset, and any gain considered as gain from the sale or exchange of a capital asset. " (c) N E T INVESTMENT INCOME DEFINED.—The term 'net investment income' means the gross investment income less the following deductions:

39 26^ic^*242^*

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26'ulcr*243-245.

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