26 U.S.C. § 801: Tax imposed

A tax is hereby imposed for each taxable year on the life insurance company taxable income of every life insurance company. Such tax shall consist of a tax computed as provided in section 11 as though the life insurance company taxable income were the taxable income referred to in section 11. life insurance gross income, reduced by life insurance deductions. life insurance company taxable income for such year (within the meaning of such section 801 but not less than zero), plus ⅛ of such balance.” In the case of any taxable year beginning before January 1, 1987 , a deficiency shall not be assessed against (and if assessed, shall not be collected from) any qualified group self-insurers’ fund to the extent such deficiency is attributable to the timing of policyholder dividend deductions. the group has received a certificate of approval from, and is subject to regulation by, the State board or agency that is responsible for administering the State workers’ disability compensation laws, each employer who is a member of the group, by written agreement, is jointly and severally bound to assume and discharge, by payment, any lawful judgment or award entered by a court of competent jurisdiction or by the State agency responsible for administering the State workers’ disability compensation laws against a member of the group, the group is prohibited by State law or regulation from using the monies collected for a purpose other than to pay, or to reserve against, claims under the State workers’ disability compensation laws and expenses, the group is prohibited by State law or regulation from taking projected investment income into account in determining members’ premiums, the group is required by State law or regulation to submit to the State board or agency that is responsible for administering the State workers’ disability compensation laws an audited financial statement, the group’s investments are limited by State law or regulation to bonds, notes, or other evidences of indebtedness issued, assumed or guaranteed by the United States of America, or by an agency or instrumentality thereof, certificates of deposit in a federally insured bank, shares or savings deposits in a federally insured savings and loan association or credit union, and certificates of deposit issued by a commercial bank duly chartered under State law, and other investments which are approved by the State board or agency that is responsible for administering the State workers’ disability compensation laws, and the group exclusively covers workers’ compensation liability, is not a commercial insurance carrier or company licensed by the State board, agency, or commissioner responsible for regulating and licensing insurance carriers and companies; and is not subject to filing under the regulatory statements of the National Association of Insurance Commissioners.” Notwithstanding the amendments made by subtitle B of title III [amending sections 593, 631, 852, 1201, and 1445 of this title and enacting provisions set out as notes under sections 631 and 1201 of this title], any gain recognized by a qualified life insurance company on the redemption at maturity of any market discount bond (as defined in section 1278 of the Internal Revenue Code of 1986) which was issued before July 19, 1984 , and acquired by such company on or before September 25, 1985 , shall be subject to tax at the rate of 31.6 percent. The preceding sentence shall apply only if the tax determined under the preceding sentence is less than the tax which would otherwise be imposed. For purposes of paragraph (1), the term ‘qualified life insurance company’ means any life insurance company subject to tax under part I of subchapter L of chapter 1 of the Internal Revenue Code of 1986.” shall suspend any pending audit of any self-insured workers’ compensation fund where the audit involves the issue of whether such fund is a mutual insurance company, shall not initiate any audit of any such fund involving such issue, and shall take no steps to collect from such fund any underpayment, interest, or penalty involving such issue. No interest shall be payable under chapter 67 of the Internal Revenue Code of 1986 on any underpayment by a self-insured workers’ compensation fund involving such issue for the period beginning on August 16, 1986 , and ending on August 16, 1987 . If the period during which a petition involving such issue could have been filed with the Tax Court by any self-insured workers’ compensation fund had not expired before August 16, 1986 , such period shall not expire before August 16, 1987 . For purposes of this subsection, the term ‘self-insured workers’ compensation fund’ means any self-insured workers’ compensation fund established pursuant to applicable State law regulating self-insured workers’ compensation funds.” As of the beginning of the first taxable year beginning after December 31, 1983 , for purposes of subchapter L of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (other than section 816 thereof), the reserve for any contract shall be recomputed as if the amendments made by this subtitle [see Effective Date note above] had applied to such contract when it was issued. For the first taxable year beginning after December 31, 1983 , in determining ‘premiums earned on insurance contracts during the taxable year’ as provided in section 832(b)(4) of the Internal Revenue Code of 1986, life insurance reserves which are included in unearned premiums on outstanding business at the end of the preceding taxable year shall be determined as provided in section 807 of the Internal Revenue Code of 1986, as amended by this subtitle, as though section 807 was applicable to such reserves in such preceding taxable year. For purposes of this subsection, the issuance date of any group contract shall be determined under [former] section 807(e)(2) of the Internal Revenue Code of 1986 (as added by this subtitle), except that if such issuance date cannot be determined, the issuance date shall be determined on the basis prescribed by the Secretary of the Treasury or his delegate for purposes of this subsection. a company having its principal place of business in Alabama and incorporated in Delaware on November 29, 1979 , or a company having its principal place of business in Houston, Texas, and incorporated in Delaware on June 9, 1947 . No adjustment under [former] section 810(d) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act [ July 18, 1984 ]) attributable to any decrease in reserves as a result of a change in a taxable year beginning before 1984 shall be taken into account in any taxable year beginning after 1983. the amount of the adjustments which would be taken into account under such section in taxable years beginning after 1983 without regard to this subparagraph, exceeds the amount of any fresh start adjustment attributable to contracts for which there was such an increase in reserves as a result of such change. the reserve attributable to such contract as of the close of the taxpayer’s last taxable year beginning before January 1, 1984 , over the reserve for such contract as of the beginning of the taxpayer’s first taxable year beginning after 1983 as recomputed under subsection (a) of this section. No premium shall be included in income to the extent such premium is directly related to an increase in a reserve for which a deduction is disallowed by subparagraph (B). a reinsurance agreement entered into after September 27, 1983 , and before January 1, 1984 , or a modification of a reinsurance agreement made after September 27, 1983 , and before January 1, 1984 , and to any reserve strengthening reported for Federal income tax purposes after September 27, 1983 , for a taxable year ending before January 1, 1984 . In the case of any reserve described in subparagraph (A), for purposes of section 807(f) of the Internal Revenue Code of 1986, any change in the treatment of any contract to which an election under section 818(c) of such Code (as in effect on the day before the date of the enactment of this Act) applied shall be treated as a change in the basis for determining the amount of any reserve. In the case of any item to which section 807(f) of such Code applies by reason of subparagraph (A) or (B), such item shall be taken into account for the first taxable year beginning after December 31, 1983 (in lieu of over the 10-year period otherwise provided in such section) unless the item would have been required to be taken into account over a period of 10 taxable years under [former] section 810(d) of such Code (as in effect on the day before the date of the enactment of this Act). Any amount included in income under section 807(f) of such Code by reason of subparagraph (A) or (B) (and any income attributable to expenses transferred in connection with the transfer of reserves described in subparagraph (A)) shall not be taken into account for purposes of determining the amount of special life insurance company deduction and the small life insurance company deduction. No deduction shall be allowed under paragraph (5) or (6) of [former] section 809(d) of such Code (as in effect before the amendments made by this subtitle) with respect to any amount described in either such paragraph which is transferred in connection with the transfer of reserves described in subparagraph (A). Except as provided in subparagraph (B), any election after September 27, 1983 , under section 818(c) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act) shall not take effect. Paragraph (3) and subparagraph (A) of this paragraph shall not apply to any election under such section 818(c) if more than 95 percent of the reserves computed in accordance with such election are attributable to risks under life insurance contracts issued by the taxpayer under a plan of insurance first filed after March 1, 1982 , and before September 28, 1983 . which made an election under such section 818(c ) before September 28, 1983 , and which was acquired in a qualified stock purchase (as defined in section 338(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) before December 31, 1983 , In the case of any corporation described in clause (i), the time for making an election under section 818(c) of such Code (with respect to the first taxable year of the corporation beginning in 1983 and ending after September 28, 1983 ), or making an election under section 338 of such Code with respect to the qualified stock purchase described in clause (i)(II), shall not expire before the close of the 60th day after the date of the enactment of the Tax Reform Act of 1986 [ Oct. 22, 1986 ]. In the case of any such election under section 818(c) or 338 of such Code which would not have been timely made but for clause (ii), the period for assessing any deficiency attributable to such election (or for filing claim for credit or refund of any overpayment attributable to such election) shall not expire before the date 2 years after the date of the enactment of this Act [ July 18, 1984 ]. if the amount of the reserves with respect to the recaptured contracts, computed at the date of recapture, that the reinsurer would have taken into account under [former] section 810(c) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act) exceeds the amount of the reserves with respect to the recaptured contracts, computed at the date of recapture, taken into account by the reinsurer under section 807(c) of the Internal Revenue Code of 1986 (as amended by this subtitle), such excess (but not greater than the amount of such excess if computed on January 1, 1984 ) shall be taken into account by the reinsurer under the method described in section 807(f)(1)(B)(ii) of the Internal Revenue Code of 1986 (as amended by this subtitle) commencing with the taxable year of recapture, and the amount, if any, taken into account by the reinsurer under clause (i) for purposes of part I of subchapter L of chapter 1 of the Internal Revenue Code of 1986 shall be taken into account by the reinsured under the method described in section 807(f)(1)(B)(i) of the Internal Revenue Code of 1986 (as amended by this subtitle) commencing with the taxable year of recapture. subsection (a) shall not apply to such company, and as of the beginning of the first taxable year beginning after December 31, 1983 , and thereafter, the reserve for any contract issued before the first day of such taxable year by such company shall be the statutory reserve for such contract (within the meaning of [former] section 809(b)(4)(B)(i) of the Internal Revenue Code of 1986). a qualified life insurance company makes an election under paragraph (1), and the tentative LICTI (within the meaning of [former] section 806(c) of such Code) of such company for its first taxable year beginning after December 31, 1983 , does not exceed $3,000,000 (determined with regard to this paragraph), the prevailing State assumed interest rate (within the meaning of section 807(c)(4) of such Code), for the adjusted reserves rate. For purposes of this subsection, the term ‘qualified life insurance company’ means any life insurance company which, as of December 31, 1983 , had assets of less than $100,000,000 (determined in the same manner as under [former] section 806(b)(3) of such Code). For purposes of applying the dollar limitations of paragraphs (2) and (3), rules similar to the rules of [former] section 806(d) of such Code shall apply. shall be made at such time and in such manner as the Secretary of the Treasury may prescribe, and once made, shall be irrevocable.” the aggregate amount of revenue received under part I of subchapter L of chapter 1 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] for the most recent taxable years for which data are available, a comparison between the amount of such revenue and the amount anticipated by reason of changes made by the Tax Equity and Fiscal Responsibility Act of 1982 [ Pub. L. 97–248 ] or the Life Insurance Tax Act of 1984 [probably means title II of div. A of Pub. L. 98–369 ], and the reasons for any difference between such aggregate revenues and anticipated revenues. The Secretary of the Treasury (in consultation with the Joint Committee on Taxation, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate) shall conduct a full and complete study of the operation of part I of subchapter L of chapter 1 of the Internal Revenue Code of 1986 during 1984, 1985, and 1986. Such study shall also include an analysis of life insurance products and the taxation thereof. Such study shall also include an analysis of whether part I of such subchapter L operates as a disincentive to growing companies. an analysis of the portion of the taxes paid by mutual life insurance companies and stock life insurance companies, and equity, life insurance reserves, other types of reserves, dividends paid to policyholders and shareholders, pension business, total assets, and gross receipts. The Secretary of the Treasury shall submit interim reports on the study conducted under this subsection to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate not later than July 1, 1986 , 1987, and 1988. Not later than January 1, 1989 , the Secretary of the Treasury shall submit a final report on the study conducted under this subsection to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. The Secretary of the Treasury shall have authority to require reporting of such data with respect to life insurance companies and their products as may be necessary to carry out the purposes of this section.”