9 0 STAT. 1740
PUBLIC LAW 94-455—OCT. 4, 1976 i
section (f), and by a d d i n g after subsection (d) the following new subsection: "(e)
Ante, p. 1606. 26 USC 843.
26 USC 1503.
T A X APPLICABLE TO MEMBER o r GROUP F I L I N G CONSOLIDATED
RETURN.—Notwithstanding any other provision of this section, if a mutual insurance company to which this section applies joins in the filing of a consolidated return (or is required to so file), the applicable tax shall consist of a normal tax and a surtax computed as provided i^^ section 11 as t h o u g h the mutual insurance company taxable income of such company were the taxable income referred to in section 11.". (2) Section 843 (relating to annual accounting period) is amended by a d d i n g at the end thereof the following sentence: " Under regulations prescribed by the Secretary, an insurance company which joins in the filing of a consolidated r e t u r n (or is required to so file) may adopt the taxable year of the common parent corporation even though such year is not a calendar year." (3) Section 1503 (relating to computation and payment of tax) is amended by adding the following new subsection: " (c) SPECIAL RULE FOR APPLICATION o r CERTAIN LOSSES A G A I N S T INCOME OF INSURANCE COMPANIES TAXED U N D E R SECTION 802.—
" (1) IN GENERAL.—If an election under section 1504(c)(2) is in effect for the taxable year and the consolidated taxable income of the members of the group not taxed under section 802 results in a consolidated net operating loss for such taxable year, then under regulations prescribed by the Secretary, the amount of such loss which cannot be absorbed in the applicable carryback periods against the taxable income of such members not taxed under section 802 shall be taken into account in determining the consolidated taxable income of the affiliated g r o u p for such taxable year to the extent of 35 percent of such loss or 35 percent of the taxable income of the members taxed under section 802, whichever is less. The unused portion of such loss shall be available as a carryover, subject to the same limitations (applicable to the sum of the loss for the carryover year and the loss (or losses) carried over to such year), in applicable carryover years. For purposes of this subsection, in determining the taxable income of each insurance company subject to tax under section 802, section 802(b)(3) shall not be taken into account. For taxable years ending with or within calendar year 1981, '25 percent' shall be substituted for '35 percent' each place it appears in the first sentence of this subsection. For taxable years ending with or within calendar year 1982, '30 percent' shall be substituted for '35 percent' each place it appears in that sentence.
.
"(2)
LOSSES o r RECENT NONLIFE AFFILIATES.—Notwithstanding
the provisions of paragraph (1), a net operating loss for a taxable year of a member of the g r o u p not taxed under section 802 shall not be taken into account in determining the taxable income of a member taxed under section 802 (either for the taxable year or as a carryover or carryback) if such taxable year precedes the sixth taxable year such members have been members of the same affiliated g r o u p (determined without regard to section 1504(b)(2)). " 26 USC 1504
(c)
note.
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EFFECTIVE D A T E AND TRANSITIONAL RULES. —
(1) EFFECTIVE DATE.—The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 1980. i. 1
(2) TRANSITION RULES W I T H RESPECT TO CARRYOVERS OR CARRYBACKS RELATING TO PRE-ELECTION TAXABLE YEARS AND NONTERMINATiON OF G R O U P. —
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