Page:United States Statutes at Large Volume 100 Part 3.djvu/597

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2405

beginning after December 31, 1986, shall be increased by the amount of the difference determined under subparagraph (A) with respect to such company. SEC. 1024. REPEAL OF PROTECTION AGAINST LOSS ACCOUNT; REVISION OF SPECIAL TREATMENT FOR SMALL COMPANIES; COMBINATION OF PARTS II AND III. (a) GENERAL RULE.—Subchapter L of chapter 1 is amended as follows: (1) Part II (other than sections 822 and 826) is hereby repealed. (2) Parts III and IV are hereby redesignated as parts II and III, respectively. (3) Section 822 (relating to determination of taxable investment income) and section 826 (relating to election by reciprocal) are hereby redesignated as sections 834 and 835, respectively, and transferred to the end of part II (as redesignated by paragraph (2)). (4) Section 831 is amended to read as follows: "SEC. 83L TAX ON INSURANCE COMPANIES OTHER THAN LIFE INSURANCE COMPANIES. "(a) GENERAL RULE.—Taxes computed as provided in section 11 shall be imposed for each taxable year on the taxable income of every insurance company other than a life insurance company. "(b) ALTERNATIVE TAX FOR CERTAIN SMALL COMPANIES.—

"(1) IN GENERAL.—In lieu of the tax otherwise applicable under subsection (a), there is hereby imposed for each taxable year on the income of every insurance company to which this subsection applies a tax computed by multiplying the taxable investment income of such company for such taxable year by the rates provided in section 11(b). "(2) COMPANIES TO WHICH THIS SUBSECTION APPLIES.—

"(A) IN GENERAL.—This subsection shall apply to every insurance company other than life (including interinsurers and reciprocal underwriters) if— "(i) the net written premiums (or, if greater, direct written premiums) for the taxable year exceed $350,000 but do not exceed $1,200,000, and "(ii) such company elects the application of this subsection for such taxable year. "(B) CONTROLLED GROUP RULES.—

"(i) IN GENERAL.—For purposes of subparagraph (A), in determining whether any company is described in clause (i) of subparagraph (A), such company shall be treated as receiving during the taxable year amounts described in such clause (i) which are received during such year by all other companies which are members of the same controlled group as the insurance company for which the determination is being made. "(ii) CONTROLLED GROUP.—For purposes of clause (i),

the term 'controlled group' means any controlled group of corporations (as defined in section 1563(a)); except that— "(I) 'more than 50 percent' shall be substituted for 'at least 80 percent' each place it appears in section 1563(a), and