77TH CONG. , 2D SESS.-CH. 619-OCT. 21 , 1942 mutual marine insurance company taxes at the rates specified in section 13 or section 14 (b) and in section 15 (b). " (2) NORMAL-TAX AND CORPORATION SURTAX NET INCOME OF FOREIGN INSURANCE COMPANIES OTHER THAN LIFE OR MUTUAL AND FOREIGN MUTUAL MARINE.-In the case of a foreign insurance company (other than a life or mutual insurance company) and a foreign mutual marine insurance company, the normal-tax net income shall be the net income from sources within the United States minus the credit provided in section 26 (a), the credit provided in section 26 (b), and the credit for income subject to the tax imposed by Subchapter E of Chapter 2 provided in section 26 (e) and the corporation surtax net income shall be the net income from sources within the United States minus the credit provided in section 26 (b) (computed by limiting such credit to 85 per centum of the net income reduced by the credit for income subject to the tax imposed by Subchapter E of Chapter 2 in lieu of 85 per centum of the adjusted net income so reduced), and minus the credit for income subject to the tax imposed by Subchapter E of Chapter 2 provided in section 26 (e). "(3) No UNITED STATES INSURANCE BUSINESS. - Foreign insur- ance companies (other than a life or mutual insurance company) and foreign mutual marine insurance companies not carrying on an insurance business within the United States shall not be tax- able under this section but shall be taxable as other foreign corporations." (b) Section 204 (b) (5) (relating to definition of premiums earned) is amended by striking out the semicolon at the end thereof and inserting a period and the following new sentence: "For the purposes of this subsection, unearned premiums shall include life insurance reserves, as defined in section 201 (c) (2), pertaining to the life, burial, or funeral insurance, or annuity business of an insur- ance company subject to the tax imposed by this section and not qualifying as a life insurance company under section 201 (b);" (c) Section 204 (c) (relating to deductions) is amended as follows: (1) by changing paragraph (5) to read: "(5) CAPITAL LOSSEs. -Capital losses to the extent provided in section 117 plus losses from capital assets sold or exchanged in order to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders. Capital assets shall be considered as sold or exchanged in order to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders to the extent that the gross receipts from their sale or exchange are not greater than the excess, if any, for the taxable year of the sum of dividends and similar distributions paid to policyholders in their capacity as such, losses paid, and expenses paid over the sum of interest, dividends, rents, and net premiums received. In the application of section 117 (e) for the purposes of this section, the net capital loss for the taxable year shall be the amount by which losses for such year from sales or exchanges of capital assets exceeds the sum of the gains from such sales or exchanges and whichever of the following amounts is the lesser: "(A) the corporation surtax net income (computed with- out regard to gains or losses from sales or exchanges of capital assets); or "(B) losses from the sale or exchange of capital assets sold or exchanged to obtain funds to meet abnormal insur- ance losses and to provide for the payment of dividends and similar distributions to policyholders." 53 Stat. 7, 8. 26U.S.C.§ 13; Supp. I, §1 13,14 (b). Ante, p. 805. 53 Stat. 18, 19. 26U.S.C.J26(a), (b). Ante, pp. 807,825. Ante, p. 806 . 54 Stat. 975. 26U. .c. §§710- 752; Supp. I,i 710-743. Post, p . 899. 53 Stat. 73. 26U.S.C.J204 (b) (5). Unearned pre- miums. Ante, p. 868. Ante, p. 867. 53 Stat. 74. 26U.S.C. 204(c). 53 Stat. 50. 26U.S.C. 117; Supp. I, § 117. Ante, pp. 843, 844, 846,847 . Ante, p. 844 . 56 STAT.] 871
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