100 STAT. 2838
PUBLIC LAW 99-514—OCT. 22, 1986
reserves) is amended by adding at the end thereof the following new sentence: "In no case shall the amount determined under paragraph (3) for any contract be less than the net surrender value of such contract." (b) CLARIFICATION OF DEFINITION OF EXCESS INTEREST.—Subpara-
graph (B) of section 808(d)(l) (defining excess interest) is amended to read as follows: "(B) in excess of interest determined at the prevailing State assumed rate for such contract." (c) COORDINATION OF 1984 FRESH-START ADJUSTMENT WITH CERTAIN ACCELERATIONS OF POLICYHOLDER DIVIDENDS DEDUCTIONS.—Sec-
tion 808 (relating to policyholder dividends deduction) is amended by adding at the end thereof the following new subsection: "(f) COORDINATION OF 1984 FRESH-START ADJUSTMENT WITH ACCELERATION OF POLICYHOLDER DIVIDENDS DEDUCTION THROUGH CHANGE IN BUSINESS PRACTICE.—
"(1) IN GENERAL.—The amount determined under paragraph (1) of subsection (c) for the year of change shall (before any reduction under paragraph (2) of subsection (c)) be reduced by so much of the accelerated policyholder dividends deduction for such year as does not exceed the 1984 fresh-start adjustment for policyholder dividends (to the extent such adjustment was not previously taken into account under this subsection). "(2) YEAR OF CHANGE.—For purposes of this subsection, the term 'year of change' means the taxable year in which the change in business practices which results in the accelerated policyholder dividends deduction takes effect. "(3)
ACCELERATED POLICYHOLDER DIVIDENDS DEDUCTION DE-
FINED.—For purposes of this subsection, the term 'accelerated policyholder dividends deduction' means the amount which (but for this subsection) would be determined for the taxable year under paragraph (1) of subsection (c) but which would have been determined (under such paragraph) for a later taxable year under the business practices of the taxpayer as in effect at the close of the preceding taxable year, "(4)
1984
FRESH-START ADJUSTMENT FOR POLICYHOLDER DIVI-
DENDS.—For purposes of this subsection, the term '1984 freshstart adjustment for policyholder dividends' means the amounts held as of December 31, 1983, by the taxpayer as reserves for dividends to policyholders under section 811(b) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1984) other than for dividends which accrued before January 1, 1984. Such amounts shall be properly reduced to reflect the amount of previously nondeductible policyholder dividends (as determined under section 809(f) as in effect on the day before the date of the enactment of the Tax Reform Act of 1984). "(5) SEPARATE APPLICATION WITH RESPECT TO LINES OF BUSI-
NESS.—This subsection shall be applied separately with respect to each line of business of the taxpayer. "(6) SUBSECTION NOT TO APPLY TO MERE CHANGE IN DIVIDEND
AMOUNT.—This subsection shall not apply to a mere change in the amount of policyholder dividends. "(7) SUBSECTION NOT TO APPLY TO POUCIES ISSUED AFTER DECEM-
BER 31, 1983.—
"(A) IN GENERAL.—This subsection shall not apply to any policyholder dividend paid or accrued with respect to a policy issued after December 31, 1983.
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