Page:United States Statutes at Large Volume 76.djvu/870

 822

26 USC 404.

26 USC 72.

PUBLIC LAW 87-792-OCT. 10, 1962

" (A) such amounts, plus all amounts theretofore received under the contract and includible in gross income under this paragraph, do not exceed " (B) the aggregate premiums or other consideration paid for the contract while the employee was an owner-employee which were allowed as deductions under section 404 for the taxable year and all prior taxable years. Any such amounts so received which are not includible in gross income under this paragraph shall be subject to the provisions of subsection (e). "(2)

Ante, p.811.

26 USC 101.

COMPUTATION OF CONSIDERATION PAID BY THE EMPLOYEE.—•

In computing— " (A) the aggregate amount of premiums or other consideration paid for the contract for purposes of subsection (c)(1)(A) (relating to the investment in the contract), " (B) the consideration for the contract contributed by the employee for purposes of subsection (d)(1) (relating to employee's contributions recoverable in 3 years), and " (C) the aggregate premiums or other consideration paid for purposes of subsection (e)(1)(B) (relating to certain amounts not received as an annuity), any amount allowed as a deduction with respect to the contract under section 404 which was paid while the employee was an employee withiu the meaning of section 401(c)(1) shall be treated as consideration contributed by the employer, and there shall not be taken into account any portion of the premiums or other consideration for the contract paid while the employee was an owneremployee which is properly allocable (as determined under regulations prescribed by the Secretary or his delegate) to the cost of life, accident, health, or other insurance. "(3)

26 USC 403. 26 USC 401. 26 USC 501.

[76 STAT.

L I F E INSURANCE CONTRACTS.—

" (A) This paragraph shall apply to any life insurance contract— " (i) purchased as a part of a plan described in section 403(a), or "(ii) purchased by a trust described in section 401(a) which is exempt from tax under section 501(a) if the proceeds of such contract are payable directly or indirectly to a participant in such trust or to a beneficiary of such participant. " (B) Any contribution to a plan described in subparagraph (A)(i) or a trust described in subparagraph (A) (ii) which is allowed as a deduction under section 404, and any income of a trust described in subparagraph (A) (ii), which is determined in accordance with regulations prescribed by the Secretary or his delegate to have been applied to purchase the life insurance protection under a contract described in subparagraph (A), is includible in the gross income of the participant for the taxable year when so applied. "(C) I n the case of the death of an individual insured under a contract described in subparagraph (A), an amount equal to the cash surrender value of the contract immediately before the death of the insured shall be treated as a payment under such plan or a distribution by such trust, and the excess of the amount payable by reason of the death of the insured over such cash surrender value shall not be includible in gross income under this section and shall be treated as provided in section 101.

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