Page:United States Statutes at Large Volume 76.djvu/1045

 76 STAT. 3

PUBLIC LAW 87-834-OCT. 16, 1962

"(f) SURTAX EXEMPTION DENIED.—Any increase in taxable income of a reciprocal attributable to the limitation provided in subsection (b) shall be taxed without regard to the surtax exemption provided in section 821(a)(2). " (g) ADJUSTMENT FOR REFUND.—If for any taxable year an attorney-in-fact is allowed a credit or refund for taxes paid with respect to which credit or refund to the reciprocal resulted under subsection (e), the taxes of such reciprocal for such taxable year shall be properly adjusted under regulations prescribed by the Secretary or his delegate. " (h) TAXES OF ATTORNEY-IN-FACT UNAFFECTED.—Nothing in this section shall increase or decrease the taxes imposed by this chapter on the income of the attorney-in-fact." (d) EXEMPTION FROM TAX.—Section 501(c) (15) (relating to exemption from tax of certain mutual insurance companies) is amended by striking out "$75,000" and in lieu thereof inserting "$150,000". (e) MUTUAL F I R E INSURANCE COMPANIES OPERATING ON BASIS OF PREMIUM DEPOSITS.— (1) APPLICATION OF SECTION 831(a).—Section 831(a) (impos-

997

Ante, p. 989.

26 USC 5oi.

aeuscsai.

ing a tax on certain mutual marine and fire insurance companies and on stock insurance companies which are not life insurance companies) is amended to read as follows: " (a) IMPOSITION OF TAX.—Taxes computed as provided in section 11 shall be imposed for each taxable year or the ttixable income of— 26 USC i u "(1) every insurance company (other than a life or mutual *"*"' ^' ^^*' insurance company), "(2) every mutual marine insurance company, and "(3) every mutual fire or flood insurance company— " (A) exclusively issuing perpetual policies, or " (B) whose principal business is the issuance of policies for which the premium deposits are the same, regardless of the length of the term for which the policies are written, if the unabsorbed portion of such premium deposits not required for losses, expenses, or establishment of reserves is returned or credited to the policyholder on cancellation or expiration of the policy." (2)

TREATMENT OF ITNABSORBED PREMIUM DEPOSITS.—Section

832 (b)(4) (relating to definition of premiums earned) is amended 26 USC 832. by adding at the end thereof the following new sentence: " For purposes of this subsection, unearned premiums of mutual fire or flood insurance companies described in section 831(a)(3)(B) "iupra. means (with respect to the policies described in section 831(a) (3)(B)) the amount of unabsorbed premium deposits which the company would be obligated to return to its policyholders at the close of the taxable year if all of its policies were terminated at such time; and the determination of such amomit shall be based on the schedule of unabsorbed premium deposit returns for each such company then in effect. Premiums paid by the subscriber of a mutual flood insurance company referred to in paragraph (3) of section 831(a) shall be treated, ior purposes of computing the taxable income of such subscriber, in the same manner as premiums paid by a policyholder to a mutual fire insurance company referred to in such paragraph (3)." (3) CONFORMING AMENDMENT.—Section 8 3 2 (b)(1)(C) is « u s e 832. amended by striking out "section 831(a)," and inserting in lieu thereof "section 831(a)(3)(A),". 26 USC 831. (4) ADJUSTMENT OF PREMIUM DEI»OSIT.—Section 832(c) (11) is amended to read as follows: "(11) dividends and similar distributions paid or declared to policyholders in their capacity as such, except in the case of a

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