PUBLIC LAW 101-508 —NOV. 5, 1990 104 STAT. 1388-451 (A) such change shall be treated as a change in a method of accounting, (B) such change shall be treated as initiated by the taxpayer, (C) such change shall be treated as having been made with the consent of the Secretary, and (D) the net adjustments which are required by section 481 of the Internal Revenue Code of 1986 to be taken into account by the taxpayer shall be taken into account over a period not to exceed 4 taxable years beginning with the taxpayer's first taxable year beginning on or after September 30, 1990. (3) COORDINATION WITH SECTION 832(b)(4)(C). —The amendments made by this section shall not affect the application of section 832(b)(4)(C) of the Internal Revenue Code of 1986. Subparts—Treatment of Salvage Recoverable SEC. 11305. TREATMENT OF SALVAGE RECOVERABLE. (a) GENERAL RULE. —Subparagraph (A) of section 832(b)(5) (defining losses incurred) is amended to read as follows: "(A) IN GENERAL.—The term 'losses incurred' means losses incurred during the taxable year on insurance contracts computed as follows: "(i) To losses paid during the taxable year, deduct salvage and reinsurance recovered during the taxable year. "(ii) To the result so obtained, add all unpaid losses on life insurance contracts plus all discounted unpaid losses (as defined in section 846) outstanding at the end of the taxable year and deduct all unpaid losses on life insurance contracts plus all discounted unpaid losses outstanding at the end of the preceding taxable year. "(iii) To the results so obtained, add estimated salvage and reinsurance recoverable as of the end of the preceding taxable year and deduct estimated salvage and reinsurance recoverable as of the end of the taxable year. The amount of estimated salvage recoverable shall be determined on a discounted basis in accordance with procedures established by the Secretary." (b) CONFORMING AMENDMENT. —Subsection (g) of section 846 is amended by adding "and" at the end of paragraph (1), by striking paragraph (2), and by redesignating paragraph (3) as paragraph (2). (c) EFFECTIVE DATE.— 26 USC 832 note. (1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 1989. (2) AMENDMENTS TREATED AS CHANGE IN METHOD OF ACCOUNTING.— (A) IN GENERAL. — In the case of any taxpayer who is required by reason of the amendments made by this section to change his method of computing losses incurred— (i) such change shall be treated as a change in a method of accounting, (ii) such change shall be treated as initiated by the taxpayer, and
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