Page:United States Statutes at Large Volume 73.djvu/159

 73 S T A T. ]

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

121

"Subpart C—Gain and Loss From Operations "Sec. SOI). In general. "Sec. SIO. Rules for certain reserves. "Sec. 811. Dividends to policyholders. "Sec. 812. Operations loss deduction. "SEC. 809. IN GENERAL. " (a) EXCLUSION OF SHARE OF INVESTMENT YIELD SET ASIDE FOR POLICYHOLDERS.—

"(1) AMOUNT.—The share of each and every item of mvestiiient yield (inchidinj^ tax-exempt interest, partially tax-exempt interest, and dividends received) of any life insurance company set aside for policyholders shall not be included in gain or loss from operations. For purposes of the preceding sentence, the share of any item set aside for policyholders shall be that percentage obtained by dividing the required interest by the investment yield; except that if the required interest exceeds the investment yield, then the share of any item set aside for policyholders shall be 100 percent. "(2) REQUIRED INTEREST.—For purposes of this part, the required interest for any taxable year is the sum of the products obtained by multiplying— " (A) each rate of interest required, or assumed by the taxpayer, in calculating the reserves described in section 810(c), by " (B) the means of the amount of such reserves computed at that rate at the beginning and end of the taxable year. " (b) GAIN AND Loss FROM OPERATIONS.— "(1) G A I N FROM OPERATIONS DEFINED.—For purposes of this part, the term 'gain from operations' means the amount by which the sum of the following exceeds the deductions provided by subsection (d): " (A) the life insurance company's share of each and every item of investment yield (including tax-exempt interest, partially tax-exempt interest, and dividends received); and " (B) the sum of the items referred to in subsection (c). "(2) Loss FROM OPERATIONS DEFINED.—For purposes of this part, the term 'loss from operations' means the amount by which the sum of the deductions provided by subsection (d) exceeds the sum of— " (A) the life insurance company's share of each and every item of investment yield (including tax-exempt interest, partially tax-exempt interest, and dividends received); and " (B) the sum of the items referred to in subsection (c). "(8) L I F E INSURANCE CDMPANY'S SHARE.—For purposes of this subpart, the life insurance company's share of any item shall be that percentage which, when added to the percentage obtained under the second sentence of subsection (a)(1), equals 100 percent. "(4) EXCEPTION.—If it is established in any case that the application of the definition of gain from operations contained in paragraph (1) results in the imposition of tax on— " (A) any interest which under section 108 is excluded from gross income, " (B) any amount of interest which under section 242 (as modified by section 804(a)(8)) is allowable as a deduction, or " (C) any amount of dividends received which under sections 243,244, and 245 (as modified by subsection (d)(8)(B)) is allowable as a deduction, adjustment shall be made to the extent necessary to prevent such imposition.

26 USC io3. ^^ "^^ ^'^^• 26 USC 243-245.

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