PUBLIC LAW 97-248—SEPT. 3, 1982
96 STAT. 545
"(i) is received under a n a n n u i t y, endowment, or life insurance contract, and "(ii) is not received as a n a n n u i t y, if no provision of this subtitle (other than this subsection) applies with respect to such a m o u n t. "(B) DIVIDENDS.—For purposes of this section, any a m o u n t received which is in the n a t u r e of a dividend or similar distribution shall be treated as a n a m o u n t not received as a n a n n u i t y. "(2) GENERAL RULE.—Any a m o u n t to which this subsection applies— "(A) if received on or after the a n n u i t y s t a r t i n g date, shall be included in gross income, or "(B) if received before the a n n u i t y s t a r t i n g date— "(i) shall be included in gross income to the extent allocable to income on the contract, and "(ii) shall not be included in gross income to the extent allocable to the investment in the contract. "(3) ALLOCATION OF AMOUNTS TO INCOME AND INVESTMENT.—
For purposes of paragraph (2)(B)— "(A) ALLOCATION TO INCOME.—Any a m o u n t to which this subsection applies shall be t r e a t e d as allocable to income on the contract to the extent that such a m o u n t does not exceed the excess (if any) of— "(i) the cash value of the contract (determined without regard to any s u r r e n d e r charge) immediately before the a m o u n t is received, over "(ii) the investment in the contract a t such time. "(B) ALLOCATION TO INVESTMENT. — Any a m o u n t to which
this subsection applies shall be t r e a t e d as allocable to investment in the contract to the extent that such a m o u n t is not allocated to income under subparagraph (A). "(4) SPECIAL RULES FOR APPLICATION O F PARAGRAPH (2)(B). —
For purposes of paragraph (2)(B)— "(A) L O A N S TREATED AS DISTRIBUTIONS.—If, during
any
taxable year, a n individual— "(i) receives (directly or indirectly) any a m o u n t as a loan under any contract to which this subsection applies, or "(ii) assigns or pledges (or agrees to assign or pledge) any portion of the value of any such contract, such a m o u n t or portion shall be t r e a t e d as received under the contract as a n a m o u n t not received as a n a n n u i t y. "(B)
TREATMENT
OF
POLICYHOLDER
DIVIDENDS.—Any
a m o u n t described in paragraph (1)(B) shall not be included in gross income under paragraph (2)(B)(i) to the extent such a m o u n t is retained by the i n s u r e r as a p r e m i u m or other consideration paid for the contract. "(5) R E T E N T I O N OF EXISTING RULES IN CERTAIN CASES.—
"(A) IN GENERAL.—In any case to which this paragraph applies— "(i) paragraph s (2)(B) and (4)(A) shall not apply, and "(ii) if paragraph (2)(A) does not apply, the a m o u n t shall be included in gross income, b u t only to the extent it exceeds the investment in the contract. "(B) EXISTING CONTRACTS.—This paragraph shall apply to contracts entered into before August 14, 1982. Any a m o u n t
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