104 STAT. 1388-446 PUBLIC LAW 101-508 —NOV. 5, 1990 "(2) PHASE-OUT. — If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any tsixable year, the $5,000,000 amount under paragraph (1) shall be reduced O^ut not below zero) by the amount of such excess. " (3) SPECIAL RULE FOR MEMBERS OF CONTROLLED GROUP.—In the case of any controlled group-;- "(A) all insurance companies which are members of such group shall be treated as 1 company for purposes of this subsection, and "(B) the amount to which paragraph (1) applies shall be allocated among such companies in such manner as the Secretary may prescribe. For purposes of the preceding sentence, the term 'controlled group' means any controlled group of corporations as defined in section 1563(a); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and subsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies. "(4) EXCEPTION FOR ACQUISITION EXPENSES ATTRIBUTABLE TO CERTAIN REINSURANCE CONTRACTS. —Paragraph (1) shall not apply to any specified policy acquisition expenses ifor any taxable year which are attributable to premiums or other consideration under any reinsurance contract. "(c) SPECIFIED POLICY ACQUISITION EXPENSES.—For purposes of this section— "(1) IN GENERAL. —The term 'specified policy acquisition expenses' means, with respect to any taxable year, so much of the general deductions for such taxable year as does not exceed the sum of— "(A) 1.75 percent of the net premiums for such taxable year on specified insurance contracts which are annuity contracts, "(B) 2.05 percent of the net premiums for such taxable year on specified insurance contracts which are group life insurance contracts, and "(C) 7.7 percent of the net premiums for such taxable year on specified insurance contracts not described in subparagraph (A) or (B). "(2) GENERAL DEDUCTIONS. — The term 'general deductions' means the deductions provided in part VI of subchapter B (sec. 161 and following, relating to itemized deductions) and in part I of subchapter D (sec. 401 and following, relating to pension, profit sharing, stock bonus plans, etc.). "(d) NET PREMIUMS. —For purposes of this section— "(1) IN GENERAL.—The term 'net premiums' means, with respect to any category of specified insurance contracts set forth in subsection (c)(l), the excess,(if any) of— "(A) the gross amount of premiums and other consideration on such contracts, over "(B) return premiums on such contracts and premiums and other consideration incurred for reinsurance of such contracts. The rules of section 803(b) shall apply for purposes of the preceding sentence. "(2) AMOUNTS DETERMINED ON ACCRUAL BASIS. —In the case of an insurance company subject to tax under part II of this subchapter, all computations entering into determinations of
�
