Page:United States Statutes at Large Volume 98 Part 1.djvu/770

 98 STAT. 722 26 USC 804.

PUBLIC LAW 98-369—JULY 18, 1984 "SEC. 804. LIFE INSURANCE DEDUCTIONS.

"For purposes of this part, the term 'life insurance deductions' means— T V q JMA f "(1) the general deductions provided in section 805, "(2) the special life insurance company deduction determined Post, p. 724. under section 806(a), and "(3) the small life insurance company deduction (if any) determined under section 806(b). 26 USC 805.

Post, p. 726.

"SEC. 805. GENERAL DEDUCTIONS. "(a) GENERAL RULE.—For purposes of this part, there shall be

allowed the following deductions: "(1) DEATH BENEFITS, ETC.—All claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts. "(2) INCREASES IN CERTAIN RESERVES.—The net increase in reserves which is required by section 807(b) to be taken into account under this paragraph. "(3) POLICYHOLDER DIVIDENDS.—The deduction for policy-

Post, p. 732.

holder dividends (determined under section 808(c)). "(4) DIVIDENDS RECEIVED BY COMPANY.—

"(A) IN GENERAL.—The deductions provided by sections 243, 244, and 245 (as modified by subparagraph (B))— "(i) for 100 percent dividends received, and "(ii) for the life insurance company's share of the dividends (other than 100 percent dividends) received. "(B) APPLICATION OF SECTION 246 (b).—In applying section

246(b) (relating to limitation on aggregate amount of deductions for dividends received) for purposes of subparagraph (A), the limit on the aggregate amount of the deductions allowed by sections 243(a)(1), 244(a), and 245 shall be 85 percent of the life insurance company taxable income, computed without regard to— "(i) the special life insurance company deduction and the small life insurance company deduction, "(ii) the operations loss deduction provided by section 810, "(iii) the deductions allowed by sections 243(a)(1), 244(a), and 245, and "(iv) any capital loss carryback to the taxable year under section 1212(a)(1), but such limit shall not apply for any taxable year for which there is a loss from operations. "(C) 100 PERCENT DIVIDEND.—For purposes of subpara-

graph (A), the term '100 percent dividend' means any dividend if the percentage used for purposes of determining the deduction allowable under section 243 or 244 is 100 percent. Such term does not include any dividend to the extent it is a distribution out of tax-exempt interest or out of dividends which are not 100 percent dividends (determined with the application of this sentence). "(D) CERTAIN DIVIDENDS RECEIVED BY FOREIGN CORPORA-

TIONS.—Subparagraph (A)(i) (and not subparagraph (A)(ii)) shall apply to any dividend received by a foreign corporation from a domestic corporation which would be a 100 percent dividend if section 1504(b)(3) did not apply for purposes of applying section 243(b)(5).

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