Page:United States Statutes at Large Volume 104 Part 2.djvu/856

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104 STAT. 1388-448 PUBLIC LAW 101-508—NOV. 5, 1990 "(A) the amount otherwise required to be capitalized under this section for such taxable year with respect to any other category of specified insurance contracts shall be reduced (but not below zero) by such negative capitalization amount, and "(B) such negative capitalization amount (to the extent not taken into account under subparagraph (A))— "(i) shall reduce (but not below zero) the unamortized balance (as of the beginning of such taxable year) of the amounts previously capitalized under subsection (a) (beginning with the amount capitalized for the most recent taxable year), and "(ii) to the extent taken into account as such a reduction, shall be allowed as a deduction for such taxable year. " (2) NEGATIVE CAPITALIZATION AMOUNT.—For purposes of paragraph (1), the term 'negative capitalization amount' means, with respect to any category of specified insurance contracts, the percentage (applicable under subsection (c)(1) to such category) of the amount (if any) by which— "(A) the amount determined under subparagraph (B) of subsection (d)(1) with respect to such category, exceeds "(B) the amount determined under subparagraph (A) of subsection (d)(1) with respect to such category. "(g) TREATMENT OF CERTAIN CEDING COMMISSIONS.— Nothing in any provision of law (other than this section) shall require the capitalization of any ceding commission incurred on or after September 30, 1990, under any contract which reinsures a specified insurance contract. "(h) SECRETARIAL AUTHORITY TO ADJUST CAPITAUZATION AMOUNTS.— "(1) IN GENERAL.— Except as provided in paragraph (2), the Secretary may provide that a type of insurance contract will be treated as a separate category for purposes of this section (and prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition expenses for such type of contract which would otherwise result under this section is substantially greater than the deferral of acquisition expenses which would have resulted if actual acquisition expenses (including indirect expenses) and the actual useful life for such type of contract had been used. "(2) ADJUSTMENT TO OTHER CONTRACTS. —I f the Secretary exercises his authority with respect to any type of contract under paragraph (1), the Secretary shall adjust the percentage which would otherwise have applied under subsection (c)(1) to the category which includes such type of contract so that the exercise of such authority does not result in a decrease in the

amount of revenue received under this chapter by reason of this

section for any fiscal year, "(i) TREATMENT OF QUALIFIED FOREIGN CONTRACTS UNDER ADJUSTED CURRENT EARNINGS PREFERENCE.—For purposes of determining adjusted current earnings under section 56(g), acquisition expenses with respect to contract described in clause (iii) of subsection (e)(l)(B) shall be capitalized and amortized in accordance with the treatment generally required under generally accepted accounting principles as if this subsection applied to such contracts for all taxable years.