Page:United States Statutes at Large Volume 96 Part 1.djvu/582

 96 STAT. 540

PUBLIC LAW 97-248—SEPT. 3, 1982 "(1) is in excess of the lowest r a t e s which a r e assumed under such contract for any period in calculating the reserves under section 810(c) for the contract under which such interest is payable, and "(2) is g u a r a n t e e d beyond the end of the taxable year on which the reserves a r e being computed, shall be t a k e n into account in computing the reserves with respect to such contract as if such interest were g u a r a n t e e d only up to the end of the taxable year."

26 USC 805.

(b) PROHIBITION A G A I N S T DEDUCTION OF INTEREST IN EXCESS OF A M O U N T CREDITED TO G R O U P P E N S I O N POLICYHOLDERS.—Section 805

(relating to the determination of policy and other contract liability requirements) is amended by adding a t the end thereof the following: "(g) SPECIAL LIMITATION FOR G R O U P P E N S I O N

CONTRACTS.—The

a m o u n t determined under paragraph s (2) and (3) of subsection (a) for policy and other contract liability requirements for group pension contracts shall not exceed the a m o u n t actually credited to the policyholders w h e the r such crediting is through p r e m i u m r a t e computations, reserve increases, excess interest, experience r a t e credits, policyholder dividends or otherwise. The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this subsection." 26 USC 805 note.

(c) PROHIBITION A G A I N S T CHANGING THE QUALIFICATION S T A T U S OF L I F E INSURANCE C O M P A N I E S. — For any tax a b l e year e n d i n g before

January 1, 1984, a tax p a y e r shall not be t r e a t e d a s other than a life insurance company (as defined in section 801(a) of such Code) because of the effect of a m o u n t s held under contracts which would be described in section 805(d) of the I n t e r n a l Revenue Code of 1954, except for the fact that such contracts do not contain p e r m a n e n t a n n u i t y purchase r a t e g u a r a n t e e s. SEC. 261. MODIFICATION OF MENGE FORMULA.

26 USC 805.

Subparagraph (B) of section 805(c)(1) (defining adjusted life insurance reserves rate) is amended to read as follows: "(B) 0.9 raised to the power of n w h e r e n is the n u m b e r (positive or negative) determined by subtracting— "(i) 100 times the average r a t e of interest assumed by the tax p a y e r in calculating such reserves, from "(ii) 100 times the adjusted reserves r a t e. " SEC. 262. CONSOLIDATED RETURNS TO BE COMPUTED ON A BOTTOM LINE BASIS.

26 USC 818.

Subsection (f) of section 818 (relating to computation on consolidated r e t u r n s of policyholders' s h a r e of investment yield) is amended to read a s follows: "(f) SPECIAL RULES FOR CONSOLIDATED R E T U R N C O M P U T A T I O N S. —

For purposes of this part, in the case of a life insurance company filing or required to file a consolidated r e t u r n under section 1501 for a taxable year, the following rules shall apply: "(1) POLICYHOLDERS' SHARE OF INVESTMENT YIELD.—The com-

putation of the policyholders' s h a r e of investment yield under subpart s B and C (including all determination s and computations incident thereto) shall be made as if such company were not filing a consolidated r e t u r n. "(2) L I F E INSURANCE COMPANY TAXABLE I N C O M E. —

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