100 STAT. 2842
PUBLIC LAW 99-514—OCT. 22, 1986 "(B) fund managers (or affiliated companies) in connection with the creation or management of the regulated investment company or trust, the diversification requirements of paragraph (1) shall be applied by taking into account the assets held by such regulated investment company or trust. "(5) INDEPENDENT INVESTMENT ADVISORS PERMITTED.—Nothing
in this subsection shall be construed as prohibiting the use of independent investment advisors." (2) Paragraph (1) of section 817(h) is amended by striking out the last sentence. (n) TREATMENT OF CERTAIN DEFERRED COMPENSATION PLANS.—
Subparagraph (A) of section 818(a)(6) (defining pension plan contract) is amended to read as follows: "(A) a governmental plan (within the meaning of section 414(d)) or an eligible State deferred compensation plan (within the meaning of section 457(b)), or". (o) DIVIDENDS WITHIN AFFILIATED GROUP.—Subsection (e) of section 818 (relating to special rule for consolidated returns) is amended to read as follows: "(e) SPECIAL RULES FOR CONSOLIDATED RETURNS.— "(1) ITEMS OF COMPANIES OTHER THAN LIFE INSURANCE COMPA-
NIES.—If an election under section 1504(c)(2) is in effect with respect to an affiliated group for the taxable year, all items of the members of such group which are not life insurance companies shall not be taken into account in determining the amount of the tentative LICTI of members of such group which are life insurance companies. "(2) DIVIDENDS WITHIN GROUP.—In the case of a life insurance company filing or required to file a consolidated return under section 1501 with respect to any affiliated group for any taxable year, any determination under this part with respect to any dividend paid by one member of such group to another member of such group shall be made as if such group was not filing a consolidated return." (p) TREATMENT OF DIVIDENDS FROM SUBSIDIARIES, ETC.—Paragraph
(4) of section 805(a) (relating to dividends received by company) is amended by redesignating subparagraph (D) as subparagraph (E) and by striking out subparagraph (C) and inserting in lieu thereof the following new subparagraphs: "(C) 100 PERCENT DIVIDEND.—For purposes of subparagraph (A)— "(i) IN GENERAL.—Except as provided in clause (ii), the term '100 percent dividend' means any dividend if the percentage used for purposes of determining the deduction allowable under section 243, 244, or 245(b) is 100 percent. "(ii) TREATMENT OF DIVIDENDS FROM NONINSURANCE
COMPANIES.—The term '100 percent dividend' does not include any distribution by a corporation which is not an insurance company to the extent such distribution is out of tax-exempt interest or out of dividends which are not 100 percent dividends (determined with the application of this clause as if it applies to distributions by all corporations including insurance companies). "(D) SPECIAL RULES FOR CERTAIN DIVIDENDS FROM INSURANCE COMPANIES.—
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