INCOME TAX 71 SEC. 188. DIFFERENT TAXABLE YEARS OF PARTNER AND PARTNER- SHIP. If the taxable year of a partner is different from that of the part- nership, the inclusions with respect to the net income of the partner- ship, in computing the net income of the partner for his taxable year, shall be based upon the net income of the partnership for any taxable year of the partnership (whether beginning on, before, or after January 1, 1939) ending within or with the taxable year of the partner. Supplement G-Insurance Companies SEC. 201. TAX ON LIFE INSURANCE COMPANIES. (a) DEINr moN.- W hen used in this chapter the term "life insur- ance company" means an insurance company engaged in the business of issuing life insurance and annuity contracts (including contracts of combined life, health, and accident insurance), the reserve funds of which held for the fulfillment of such contracts comprise more than 50 per centum of its total reserve funds. (b) IMPOSITION OF TAX. - (1) IN GENERAL.- In lieu of the tax imposed by sections 13 and 14, there shall be levied, collected, and paid for each taxable year upon the special class net income of every life insurance company a tax of 161/2 per centum of the amount thereof. (2) SPECIAL CLASS NET INCOME OF FOREIGN LI INSURANCE COM- PANIEs. -In the case of a foreign life insurance company, the special class net income shall be an amount which bears the same ratio to the special class net income, computed without regard to this para- graph, as the reserve funds required by law and held by it at the end of the taxable year upon business transacted within the United States bear to the reserve funds held by it at the end of the taxable year upon all business transacted. (3) No UNITED STATES INSURANCE BUSINESS.-Foreign life insur- ance companies not carrying on an insurance business within the United States and holding no reserve funds upon business trans- acted witithi e United States, shall not be taxable under this section but shall be taxable as other foreign corporations. SEC. 202. GROSS INCOME OF LIFE INSURANCE COMPANIES. (a) GRoss INCOME DEFINJ).- (1) IN GENERAL.- In the case of a life insurance company the term "gross income" means the gross amount of income received during the taxable year from interest, dividends, and rents. (2) CRoss REFERENCE.- For inclusion in computation of tax of amount specified in share- holder's consent, see section 28. (b) RESERVE FUNDS REQUIRED BY LAW, DEFINED. -The term "reserve funds required by law" includes, in the case of assessment insurance, sums actually deposited by any company or association with State or Territorial officers pursuant to law as guaranty or reserve funds, aid any funds maintained under the charter or articles of incorporation of the company or association exclusively for the payment of claims arising under certificates of membership or policies issued upon the assessment plan and not subject to any other use. SEC. 203. NET INCOME OF LIFE INSURANCE COMPANIES. (a) GENERAL RULE.- In the case of a life insurance company the term "net income" means the gross income less- (1) TAX-FREE INTEREr. - The amount of interest received during the taxable year which under section 22 (b) (4) is excluded from gross income;
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