26 U.S.C. § 805: General deductions

All claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts. The net increase in reserves which is required by section 807(b) to be taken into account under this paragraph. The deduction for policyholder dividends (determined under section 808(c)). for 100 percent dividends received, and for the life insurance company’s share of the dividends (other than 100 percent dividends) received. the deduction allowed under section 172, the deductions allowed by sections 243(a)(1) and 245, and any capital loss carryback to the taxable year under section 1212(a)(1), Except as provided in clause (ii), the term “100 percent dividend” means any dividend if the percentage used for purposes of determining the deduction allowable under section 243 or 245(b) is 100 percent. The term “100 percent dividend” does not include any distribution by a corporation which is not an insurance company to the extent such distribution is out of tax-exempt interest, or out of the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, or out of dividends which are not 100 percent dividends (determined with the application of this clause as if it applies to distributions by all corporations including insurance companies). the paying company’s share determined under section 812 for such taxable year, exceeds the receiving company’s share determined under section 812 for its taxable year in which the dividend is received or accrued, the portion of such dividend attributable to prorated amounts, multiplied by the percentage obtained by subtracting the share described in subclause (II) of clause (i) from the share described in subclause (I) of such clause. For purposes of this subparagraph, the term “prorated amounts” means tax-exempt interest, the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, and dividends other than 100 percent dividends. any dividend by the paying corporation shall be treated as paid first out of earnings and profits for taxable years beginning after December 31, 1983 , attributable to prorated amounts (to the extent thereof), and by determining the portion of earnings and profits so attributable without any reduction for the tax imposed by this chapter. Rules similar to the rules of this subsection shall apply in the case of 100 percent dividends paid by an insurance company which is not a life insurance company. 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)(2). gross premiums paid during such taxable year, and distributions (other than amounts includible in the policyholder’s gross income) during such taxable year to which section 72(e) applies. commissions payable with respect to such policy or contract for the taxable year, and asset management fees, surrender charges, mortality and expense charges, and any other fees or charges specified in regulations prescribed by the Secretary which are imposed (or which would be imposed were the policy or contract canceled) with respect to such policy or contract for the taxable year. The consideration (other than consideration arising out of indemnity reinsurance) in respect of the assumption by another person of liabilities under insurance and annuity contracts. are paid or accrued by another insurance company in respect of policies the taxpayer has reinsured, and are reimbursable by the taxpayer under the terms of the reinsurance contract. Subject to the modifications provided by subsection (b), all other deductions allowed under this subtitle for purposes of computing taxable income. In applying section 163 (relating to deduction for interest), no deduction shall be allowed for interest in respect of items described in section 807(c). the deduction provided by section 170, the deductions provided by paragraphs (3) and (4) of subsection (a), any net operating loss carryback to the taxable year under section 172, and any capital loss carryback to the taxable year under section 1212(a)(1), and under regulations prescribed by the Secretary, a rule similar to the rule contained in section 170(d)(2)(B) 1 (relating to special rule for net operating loss carryovers) shall be applied. 1 See References in Text note below. Section 171 shall not apply. For rules relating to amortizable bond premium, see section 811(b). Except as provided in subsection (a)(4), the deductions for dividends received provided by sections 243 and 245 shall not be allowed.