112 STAT. 2681-893 PUBLIC LAW 105-277 —OCT. 21, 1998 "(A) there shall be disregarded any item of income, gain, loss, or deduction with respect to any transaction or series of transactions one of the principal purposes of which is qualifying income or gain for the exclusion under this section, including any transaction or series of transactions a principal purpose of which is the acceleration or deferral of any item in order to claim the benefits of such exclusion through the application of this subsection, "(B) there shall be disregarded any item of income, gain, loss, or deduction of an entity which is not engaged in regular and continuous transactions with customers which are not related persons, "(C) there shall be disregarded any item of income, gain, loss, or deduction with respect to any transaction or series of transactions utilizing, or doing business with— "(i) one or more entities in order to satisfy any home country requirement under this subsection, or "(ii) a special purpose entity or arrangement, including a securitization, financing, or similar entity or arrangement, if one of the principal purposes of such transaction or series of transactions is qualifying income or gain for the exclusion under this subsection, and "(D) a related person, an officer, a director, or an employee with respect to any controlled foreign corporation (or qualified business unit) which would otherwise be treated as a customer of such corporation or unit with respect to any transaction shall not be so treated if a principal purpose of such transaction is to satisfy any requirement of this subsection. "(8) REGULATIONS.— The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, subsection (c)(l)(B)(i), subsection (c)(2)(C)(ii), and the last sentence of subsection (e)(2). "(9) APPLICATION.— Th is subsection, subsection (c)(2)(C)(ii), and the last sentence of subsection (e)(2) shall apply only to the first taxable year of a foreign corporation beginning after December 31, 1998, and before January 1, 2000, and to taxable years of United States shareholders with or within which such taxable year of such foreign corporation ends.", (b) INCOME DERIVED FROM INSURANCE BUSINESS.— (1) INCOME ATTRIBUTABLE TO ISSUANCE OR REINSURANCE.— (A) IN GENERAL.— Section 953(a) (defining insurance income) is amended to read as follows: " (a) INSURANCE INCOME.— "(1) IN GENERAL. —For purposes of section 952(a)(1), the term 'insurance income' means any income which— "(A) is attributable to the issuing (or reinsuring) of an insurance or annuity contract, and "(B) would (subject to the modifications provided by subsection (b)) be taxed under subchapter L of this chapter if such income were the income of a domestic insurance company. "(2) EXCEPTION. — Such term shall not include any exempt insurance income (as defined in subsection (e)).".
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