PUBLIC LAW 104-191—AUG. 21, 1996 110 STAT. 2093 reason of no additional premiums being received under the contract by reason of a lapse occurring after October 13, 1995. (3) SPECIAL RULE FOR DEFERRED ACQUISITION COSTS.— In the case of the occurrence of any event described in subparagraph (A) or (B) of paragraph (1) of this subsection with respect to any policy or contract— (A) section 848 of the Internal Revenue Code of 1986 shall not apply to the unamortized balance (if any) of the specified policy acquisition expenses attributable to such policy or contract immediately before the insurance compan^s taxable year in which such event occurs, and (B) there shall be allowed as a deduction to such company for such taxable year under chapter 1 of such Code an amount equal to such unamortized balance. Subtitle B—Treatment of Individuals Who Lose United States Citizenship SEC. 511. REVISION OF INCOME, ESTATE, AND GIFT TAXES ON INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP. (a) IN GENERAL.— Subsection (a) of section 877 is amended to read as follows: "(a) TREATMENT OF EXII'ATRIATES.— "(1) IN GENERAL.— Every nonresident alien individual who, within the 10-year period immediately preceding the close of the taxable year, lost United States citizenship, unless such loss did not have for one of its principal purposes the avoidance of taxes under this subtitle or subtitle B, shall be taxable for such taxable year in the msinner provided in subsection (b) if the tax imposed pursuant to such subsection exceeds the tax which, without regard to this section, is imposed pursuant to section 871. "(2) CERTAIN INDIVIDUALS TREATED AS HAVING TAX AVOID- ANCE PURPOSE.— For purposes of paragraph (1), an individual shall be treated as having a principal purpose to avoid such taxes if— "(A) the average annual net income tax (as defined in section 38(c)(1)) of such individual for the period of 5 taxable years ending before the date of the loss of United States citizenship is greater than $100,000, or "(B) the net worth of the individual as of such date is $500,000 or more. In the case of the loss of United States citizenship in any calendar year after 1996, such $100,000 and $500,000 amounts shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting '1994' for '1992' in subparagraph (B) thereof. Any increase under the preceding sentence shall be rounded to the nearest multiple of $1,000. ". (b) EXCEPTIONS.— (1) IN GENERAL.— Section 877 is amended by striking subsection (d), by redesignating subsection (c) as subsection (d), and by inserting after subsection (b) the following new subsection: "(c) TAX AVOIDANCE NOT PRESUMED IN CERTAIN CASES.—
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