Page:United States Statutes at Large Volume 76.djvu/1041

 76 STAT. ]

PUBLIC LAW 87-834-OCT. 16, 1962

993

For purposes of the preceding sentence, the term 'savings credited to subscriber accounts' means such portion of the surplus as is credited to the individual accounts of subscribers before the 16th day of the third month following the close of the taxable year, but only if the company would be obligated to pay such amount promptly to such subscriber if he terminated his contract at the close of the company's taxable year. For purposes of determining his taxable income, the subscriber shall treat any such savings credited to his account as a dividend paid or declared. " (c) SPECIAL DEDUCTION FOR SMALL COMPANY HAVING GROSS AMOUNT OF LESS T H A N $1,100,000.—

"(1) IN GENERAL.—If the gross amount received during the taxable year by a taxpayer subject to the tax imposed by section 821(a) from the items described in section 822(b) (other than paragraph (1)(D) thereof) and premiums (including deposits and assessments) does not equal or exceed $1,100,000, then in determining the statutory underwriting income or loss for the taxable year there shall be allowed an additional deduction of $6,000; except that if such gross amount exceeds $500,000, such additional deduction shall be equal to 1 percent of the amount by which $1,100,000 exceeds such gross amount. "(2) LIMITATION.—The amount of the deduction allowed under paragraph (1) shall not exceed the statutory underwriting income for the taxable year, computed without regard to any deduction under this subsection or section 824(a). "SEC. 824. ADJUSTMENTS TO PROVIDE PROTECTION AGAINST LOSSES. " (a) ALLOWANCE OF DEDUCTION.—

"(1) IN GENERAL.—In determining the statutory underwriting income or loss for any taxable year there shall be allowed as a deduction the sum of— "(^A) an amount equal to 1 percent of the losses incurred during the taxable year (as determined under section 8-32(b) 26 USC 832. (5)), plus " (B) an amount equal to 25 percent of the underwriting gain for the taxable year, plus " (C) if the concentrated windstorm, etc., premium percentage for the taxable year exceeds 40 percent, an amount determined by applying so much of such percentage as exceeds 40 percent to the underwriting gain for the taxable year. For purposes of this paragraph, the term 'underwriting gain' means statutory underwriting income, computed without any deduction under this subsection. " (2) SPECIAL RULE FOR COMPANIES HAVING CONCENTRATED WINDSTORM, ETC., RISKS.—For purposes of paragraph (1)(C), the term

'concentrated windstorm, etc., premium percentage' means, with respect to any taxable year, the percentage obtained by dividing— " (A) the amount of the premiums earned on insurance contracts during the taxable year (as defined in section 832 (b)(4)), to the extent attributable to insuring against losses 26 USC 832; arising, either in any one State or within 200 miles of any ^°^'' ^- ^^^" fixed point selected by the taxpayer, from windstorm, hail, flood, earthquake, or similar hazards, by " (B) the amount of the premiums earned on insurance contracts during the taxable year (as so defined). " (b) PROTECTION AGAINST LOSS ACCOUNT.—Each insurance company

subject to the tax imposed by section 821(a) for any taxable year shall. for purposes of this part, establish and maintain a protection against loss account. 78135 0 - 6 3 - 6 6

Ante, p. 989.

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