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PUBLIC LAW 86-89-JUNE 26, 1969
[78 S T A T.
"(1) IN GENERAL.—Each stock life insurance company shall, for purposes of this part, establish and maintain a policyholders surplus account. The amount in such account on J a n u a i y 1, 1959, shall be zero. "(2) ADDITIONS TO ACCOUNT.—The amount added to the policyholders surplus account for any taxable year beginning after December 31, 1958, shall be the sum of— " (A) an amount equal to 50 percent of the amount by which the gain from operations exceeds the taxable investment income, " (B) the deduction for certain nonparticipating contracts provided by section 809(d)(5) (as limited by section.809 (f)),and " (C) the deduction for group life and group accident and health insurance contracts provided by section 809(d)(6) (as limited by section 809(f)). "(3) SUBTRACTIONS PROM ACCOUNT.—There shall be subtracted from the policyholders surplus account for any taxable year an amount equal to the sum of— " (A) the amount which (without regard to subparagraph (B)) IS treated under this section as distributed out of the policyholders surplus account, and " (B) the amount (determined without regard to section 802(a)(3)) by which the tax imposed for the taxable year by section 802(a)(1) is increased by reason of section 802(b)(3). "(d)
SPECIAL RULES.— " (1) ELECTION TO TRANSFER AMOUNTS FROM POLICYHOLDERS SURPLUS ACCOUNT TO SHAREHOLDERS SURPLUS ACCOUNT.—
" (A) IN GENERAL.—A taxpayer may elect for any taxable year for which it is a life insurance company to subtract from its policyholders surplus account any amount in such account as of the close of such taxable year. The amount so subtracted, less the amount of the tax imposed with respect to such amount by reason of section 802(b)(3), shall be added to the shareholders surplus account as of the beginning of the succeeding taxable year. " (B) MANNER AND EFFECT OF ELECTION.—The election provided by subparagraph (A) shall be made (in such manner and in such form as the Secretary or his delegate may by regulations prescribe) after the close of the taxable year and not later than the time prescribed by law for filing the return (including extensions thereof) for the taxable year. Such an election, once made, may not be revoked. "(2)
Pomt, p. 139.
TERMINATION AS LIFE INSURANCE COMPANY.— " (A) EFFECT or TERMINATION.—Except as provided in sec^JQJ^ 3 8 1 (C) (22) (relating to carryovers in certain corporate
readjustments), if— " (i) for any taxable year the taxpayer is not an insurance company, or " (ii) for any two successive taxable years the taxpayer is not a life insurance company, then the amount taken into account under section 802(b)(3) for the last preceding taxable year for which it was a life insurance company shall be increased (after the application of subparagraph (B)) by the amount remaining m its policyholders surplus account at the close of such last preceding taxable year. " (B) EFFECT OF CERTAIN DISTRIBUTIONS.—If for any taxable
year the taxpayer is an insurance company but not a life in-
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