Page:United States Statutes at Large Volume 90 Part 2.djvu/172

 90 STAT. 1640 26 USC 819A.

PUBLIC LAW 94-455—OCT. 4, 1976 "SEC. 819A. CONTIGUOUS COUNTRY BRANCHES OF DOMESTIC LIFE INSURANCE COMPANIES. " (a) EXCLUSION OF I T E M S. — I n the case of a domestic mutual insurance company which— " (1) is a life insurance company, " (2) has a contiguous country life insurance branch, and " (3) makes the election provided by subsection (g) with respect to such branch, there shall be excluded from each and every item involved in the determination of life insurance company taxable income the items separately accounted for in accordance with subsection (c).

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"(b)

CONTIGUOUS COUNTRY L I F E INSURANCE B R A N C H. — For p u r -

poses of this section, the term 'contiguous country life insurance branch' means a branch which— " (1) issues insurance contracts insuring risks in connection with the lives or health of residents of a country which is contiguous to the United States, " (2) has its principal place of business in such contiguous count r y, and " (3) would constitute a mutual life insurance company if such branch were a separate domestic insurance company. For purposes of this section, the term 'insurance contract' means any jjfe^ health, accident, or annuity contract or reinsurance contract or any contract relating thereto.

"Insurance contract." /

(c) SEPARATE ACCOUNTING R E Q U I R E D. — Any tax p a y e r which makes

the election provided by subsection (g) shall establish and maintain a separate account for the various income, exclusion, deduction, asset, reserve, liability, and surplus items properly attributable to the contracts described in subsection (b). Such separate accounting shall be made— " (1) in accordance with the method regularly employed by such company, if such method clearly reflects income derived from, and the other items attributable to, the contracts described in subsection (b), and " (2) in all other cases, in accordance with regulations prescribed by the Secretary.

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" (d) RECOGNITION OF G A I N ON ASSETS I N B R A N C H ACCOUNT. — I f the

aggregate fair market value of all the invested assets and tangible property which are separately accounted for by the domestic life insurance company in the branch account established pursuant to subsection (c) exceeds the aggregate adjusted basis of such assets for purposes of determining gain, then the domestic life insurance company shall be treated as having sold all such assets on the first day of the first taxable year for which the election is in effect a t their fair market value on such first day. Notwithstanding any other provision of this chapter, the net gain shall be recognized to the domestic life insurance company on the deemed sale described in the preceding sentence. ^

" (e) TRANSACTIONS B E T W E E N CONTIGUOUS COUNTRY B R A N C H AND DOMESTIC L I F E INSURANCE C O M P A N Y. — " (1) REIMBURSEMENT FOR HOME OFFICE SERVICES, ETC.—Any p a y -

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ment, transfer, reimbursement, credit, or allowance which is made from a separate account established pursuant to subsection (c) to one or more other accounts of a domestic life insurance company as reimbursement for costs incurred for or with respect to the insurance (or reinsurance) of risks accounted for i n such separate account shall be taken into account by the domestic life insurance company i n the same manner as if such payment, transfer, reim-

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