Page:United States Statutes at Large Volume 73.djvu/153

 73 S T A T. ]

PUBLIC LAW 8 6 - 6 9 - J U N E 25, 1959

115

"(a)
 * 'SEC. 802. TAX IMPOSED.

TAX IMPOSED.—

" (1) IN GENERAL.—A tax is hereby imposed for each taxable year beginning after December 31, 1957, on the life insurance company taxable income of every life insurance company. Such tax shall consist of— " (A) a normal tax on such income computed at the rate provided by section 11(b), and " (B) a surtax, on so much of such income as exceeds $25,000, computed at the rate provided by section 11(c). "(2) TAX I N CASE or CAPITAL GAINS.—If for any taxable year beginning after December 31, 1958, the net long-term capital gain of any life insurance company exceeds the net short-term capital loss, there is hereby imposed a tax equal to 25 percent of such excess. "(3) SPECIAL RULE FOR 1959 AND 19GO.—If any amount is subtracted from the policyholders surplus account under section 815 (c)(3) for a taxable year beginning in 1959 or 1960 on account of a distribution in 1959 or 1960 (not including any distribution treated under section 815(d)(2)(B) as made in 1959 or 1960), the tax imposed for such taxable year on the life insurance company taxable income shall be the amount determined under paragraph (1) reduced by the following percentage of the amount by which the tax imposed by paragraph (1) is (without regard to this paragraph) increased, on account of the amount so subtracted, by reason of section 802(b)(3) — " (A) in the case of a taxable year beginning in 1959, 66% percent: and " (B) in the case of a taxable year beginning in 1960, SSYs percent. The preceding sentence shall not apply with respect to any payment treated as a distribution under section 815(d)(3). "(b)

L I F E INSURANCE COMPANY TAXABLE INCOME DEFINED.—For

purposes of this part, the term 'life insurance company taxable income' means the sum of— "(1) the taxable investment income (as defined in section 804) or, if smaller, the gain from operations (as defined in section 809>), " (2) if the gain from operations exceeds the taxable investment income, an amount equal to 50 percent of such excess, plus " (3) the amount subtracted from the policyholders surplus account for the taxable year, as determined under section 815. "Subpart B—Investment Income "Sec. 804. Taxable investment income. "Sec. 805. Policy and other contract liability requirements. "Sec. 806. Certain changes in reserves and assets. "SEC. 804. TAXABLE INVESTMENT INCOME. "(a') IN GENERAL. — " (1) E X C L U S I O N OF POLICYHOLDERS' SHARE o r INVESTMENT

YIELD.—The policyholders' share of each and every item of investment yield (including tax-exempt interest, partially tax-exempt interest, and dividends received) of any life insurance company shall not be included in taxable investment income. For purposes of the preceding sentence, the policyholders' share of any item shall be that percentage obtained by dividing the policy and other contract liability requirements by the investment yield; except that if the policy and other contract liability requirements exceed

26 USC 11.

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