PUBLIC LAW 109–280—AUG. 17, 2006
120 STAT. 1011
contract solely because a qualified long-term care insurance contract is a part of or a rider on such contract.’’. (3) EXPANSION OF TAX-FREE EXCHANGES OF LIFE INSURANCE, ENDOWMENT, AND ANNUITY CONTRACTS FOR LONG-TERM CARE CONTRACTS.—Subsection (a) of section 1035 of such Code (relating to certain exchanges of insurance policies) is amended— (A) in paragraph (1) by inserting ‘‘or for a qualified long-term care insurance contract’’ before the semicolon at the end, (B) in paragraph (2) by inserting ‘‘, or (C) for a qualified long-term care insurance contract’’ before the semicolon at the end, and (C) in paragraph (3) by inserting ‘‘or for a qualified long-term care insurance contract’’ before the period at the end. (4) TAX-FREE EXCHANGES OF QUALIFIED LONG-TERM CARE INSURANCE CONTRACT.—Subsection (a) of section 1035 of such Code (relating to certain exchanges of insurance policies) is amended by striking ‘‘or’’ at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting ‘‘; or’’, and by inserting after paragraph (3) the following new paragraph: ‘‘(4) a qualified long-term care insurance contract for a qualified long-term care insurance contract.’’. (c) TREATMENT OF COVERAGE PROVIDED AS PART OF A LIFE INSURANCE OR ANNUITY CONTRACT.—Subsection (e) of section 7702B of such Code (relating to treatment of qualified long-term care insurance) is amended to read as follows: ‘‘(e) TREATMENT OF COVERAGE PROVIDED AS PART OF A LIFE INSURANCE OR ANNUITY CONTRACT.—Except as otherwise provided in regulations prescribed by the Secretary, in the case of any long-term care insurance coverage (whether or not qualified) provided by a rider on or as part of a life insurance contract or an annuity contract— ‘‘(1) IN GENERAL.—This title shall apply as if the portion of the contract providing such coverage is a separate contract. ‘‘(2) DENIAL OF DEDUCTION UNDER SECTION 213.—No deduction shall be allowed under section 213(a) for any payment made for coverage under a qualified long-term care insurance contract if such payment is made as a charge against the cash surrender value of a life insurance contract or the cash value of an annuity contract. ‘‘(3) PORTION DEFINED.—For purposes of this subsection, the term ‘portion’ means only the terms and benefits under a life insurance contract or annuity contract that are in addition to the terms and benefits under the contract without regard to long-term care insurance coverage. ‘‘(4) ANNUITY CONTRACTS TO WHICH PARAGRAPH (1) DOES NOT APPLY.—For purposes of this subsection, none of the following shall be treated as an annuity contract: ‘‘(A) A trust described in section 401(a) which is exempt from tax under section 501(a). ‘‘(B) A contract— ‘‘(i) purchased by a trust described in subparagraph (A),
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26 USC 1035.
Regulations.
Applicability.
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