Page:United States Statutes at Large Volume 98 Part 1.djvu/798

 98 STAT. 750

PUBLIC LAW 98-369—JULY 18, 1984 "(g)

BURIAL AND FUNERAL BENEFIT INSURANCE COMPANIES.—A

burial or funeral benefit insurance company engaged directly in the manufacture of funeral supplies or the performance of funeral services shall not be taxable under this part but shall be taxable under section 821 or section 831. 26 USC 817.

Ante, p. 726.

Ante, p. 722.

"SEC. 817. TREATMENT OF VARIABLE CONTRACTS.

"(a) INCREASES AND DECREASES IN RESERVES.—For purposes of subsections (a) and (b) of section 807, the sum of the items described in section 807(c) taken into account as of the close of the taxable year with respect to any variable contract shall, under regulations prescribed by the Secretary, be adjusted— "(1) by subtracting therefrom an amount equal to the sum of the amounts added from time to time (for the taxable year) to the reserves separately accounted for in accordance with subsection (c) by reason of appreciation in value of assets (whether or not the assets have been disposed of), and "(2) by adding thereto an amount equal to the sum of the amounts subtracted from time to time (for the tsixable year) from such reserves by reason of depreciation in value of assets (whether or not the assets have been disposed of). The deduction allowable for items described in paragraphs (1) and (6) of section 805(a) with respect to variable contracts shall be reduced to the extent that the amount of such items is increased for the taxable year by appreciation (or increased to the extent that the amount of such items is decreased for the taxable year by depreciation) not reflected in adjustments under the preceding sentence. "(b) ADJUSTMENT TO BASIS OF ASSETS HELD IN SEGREGATED ASSET

Ante, p. 733.

ACCOUNT.—In the case of variable contracts, the basis of each asset in a segregated asset account shall (in addition to all other adjustments to basis) be— "(1) increased by the amount of any appreciation in value, and "(2) decreased by the amount of any depreciation in value, to the extent such appreciation and depreciation are from time to time reflected in the increases and decreases in reserves or other items referred to in subsection (a) with respect to such contracts. "(c) SEPARATE ACCOUNTING.—For purposes of this part (other than section 809), a life insurance company which issues variable contracts shall separately account for the various income, exclusion, deduction, asset, reserve, and other liability items properly attributable to such variable contracts. For such items as are not accounted for directly, separate accounting shall be made— "(1) in accordance with the method regularly employed by such company, if such method is reasonable, and "(2) in all other cases, in accordance with regulations prescribed by the Secretary. "(d) VARIABLE CONTRACT DEFINED.—For purposes of this part, the term 'variable contract' means a contract— "(1) which provides for the allocation of all or part of the amounts received under the contract to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the company, "(2) which— "(A) provides for the payment of annuities, or 1. "(B) is a life insurance contract, and "(3) under which—

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