Page:United States Statutes at Large Volume 98 Part 1.djvu/784

 98 STAT. 736

PUBLIC LAW 98-369—JULY 18, 1984 such excess shall be allowed as a life insurance deduction for the succeeding taxable year. "(3) RECOMPUTED DIFFERENTIAL EARNINGS AMOUNT.—For purposes of this subsection, the term 'recomputed differential earnings amount' means, with respect to any taxable year, the amount which would be the differential earnings amount for such taxable year if the average mutual earnings rate taken into account under subsection (c)(2) were the average mutual earnings rate for the calendar year in which the taxable year begins. "(4) SPECIAL RULE WHERE COMPANY CEASES TO BE MUTUAL U F E INSURANCE COMPANY.—Except as provided in section 381(c)(22),

if—

Ante, p. 732.

"(A) a life insurance company is a mutual life insurance company for any taxable year, but "(B) such life insurance company is not a mutual life insurance company for the succeeding taxable year, any adjustment under paragraph (1) or (2) by reason of the recomputed differential earnings amount for the first of such taxable years shall be taken into account for the first of such taxable years. "(g) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) STATEMENT GAIN OR LOSS FROM OPERATIONS.—The term 'statement gain or loss from operations' means the net gain or loss from operations required to be set forth in the annual statement— "(A) determined with regard to policyholder dividends (as defined in section 808) but without regard to Federal income taxes, "(B) determined on the basis of the tax reserves rather than statutory reserves, and "(C) properly adjusted for realized capital gains and losses and other relevant items. "(2) OTHER TERMS.—Except as otherwise provided in this section, the terms used in this section shall have the same respective meanings as when used in the annual statement. "(3) DETERMINATIONS BASED ON AMOUNT SET FORTH IN ANNUAL

STATEMENT.—Except as otherwise provided in this section or in regulations, all determinations under this section shall be made on the basis of the amounts required to be set forth on the annual statement. "(4) ANNUAL STATEMENT.—The term 'annual statement' means the annual statement for life insurance companies approved by the National Association of Insurance Commissioners. "(5) REDUCTION IN EQUITY BASE FOR PORTION OF EQUITY ALLOCABLE TO LIFE INSURANCE BUSINESS IN NONCONTIGUOUS WESTERN HEMISPHERE COUNTRIES.—The equity base of any mutual life

insurance company shall be reduced by an amount equal to the portion of the equity base attributable to the life insurance business multiplied by a fraction— <H "(A) the numerator of which is the portion of the tax reserves which is allocable to life insurance contracts issued foj Qj^ ^jjg jjfg Qf residents of countries in the Western Hemisphere which are not contiguous to the United States, and

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