78 STAT. ]
PUBLIC LAW 88-272-FEB. 26, 1964
55
(or corresponding provisions of prior law) shall be treated as a dividend from a domestic corporation Aviiioh is subject to taxation under this chapter." (b) TECHNICAL AMENDMENTS.—
(1) Section 244 (relating to dividends received on certain preferred stock) is amended by inserting " (a) GENERAL RULE. — " before "'In case of a corporation," and by adding at the end thereof the following new subsection: "(b) EXCEPTION.—If the dividends described in subsection (a)(1) are qualifying dividends (as defined in section 248(b)(1), but determined without regard to section 243(c)(4)) — "(1) subsection (a) shall be applied separately to such qualifying dividends, and "(2) for purposes of subsection (a)(3), the percentage applicable to such qualifying dividends shall be 100 percent in lieu of 85 percent." (2) Section 246(b) (relating to limitation on aggregate amount of deductions for dividends received) is amended by striking out "243(a), 244," each place it appears therein and inserting in lieu thereof "243 (a)(1), 244(a),". (3) Section 804(a)(5) (relating to the application of section 246(b) to taxable investment income of life insurance companies) is amended by striking out "243(a), 244," and inserting m lieu thereof "243(a)(1), 244(a),". (4) Section 8 0 9 (d)(8)(B) (relating to the application of section 246(b) to the life insurance company's share of certain dividends) is amended by striking out "243(a), 244," each place it appears therein and inserting in lieu thereof "243(a)(1), 244(a),". (c) EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall apply with respect to dividends received in taxable years ending after December 31, 1963. SEC. 215. INTEREST ON LOANS INCURRED TO PURCHASE CERTAIN INSURANCE AND ANNUITY CONTRACTS. (a) DISALLOWANCE OF INTEREST DEDUCTION.—Section 264(a) (relating to certain amounts paid in connection with insurance contracts) is amended— (1) by inserting after paragraph (2) the following new paragraph: "(3) Except as provided in subsection (c), any amount paid or accrued on indebtedness incurred or continued to purchase or carry a life insurance, endowment, or annuity contract (other than a single premium contract or a contract treated as a single premium (contract) pursuant to a plan of purchase which contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of such contract (either from the insurer or otherwise)." (2) by adding at the end thereof the following new sentence: "Paragraph (3) shall apply only in respect of contracts purchased after August 6, 1963." (b) ExcEi-rioNs.—Section 264 is amended by adding at the end thereof the following new subsection: "(c) ExcEiTioNS,—Subsection (a)(3) shall not apply to any amount paid or accrued by a person durhig a taxable year on indebtedness incurred or continued as part of a plan referred to in subaction (a)(3) — "(1) if no part of 4 of the annual premiums due during the 7-year period (beginning with the date the first premium on the 31-667 0-65—7
68A Stat. 7 3. 26 USC 244.
Ante,
p. 52.
26 USC 246.
26 u^sc sol'
26 USC sog.
26 USC 264.
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