70 S T A T. ]
PUBLIC LAW 4 2 9 - M A R. 13, 1956
48
that amount which bears the same ratio to the net investment income as such reserves bear to the ([ualified reserves. "(2) NON-LIFE ixsi RANCE RESERVES DEFINED.—For purposes of this subpart, the term 'non-life insurance reserves' means the sum of the unearned premiums and the unpaid losses (whether or not ascertained) —
- '(A) on contracts other than life insurance, annuity, and
noncancellable health and accident insurance contracts (including life insurance or annuitj' contracts combined with noncancellable health and accident insurance), and " (B) which are not included in life insurance reserves (as definetl in section 801(b)). For purposes of this paragraph, such unearned premiums shall not be considered to be less than 2o percent of the net premiums written during the taxable year on such other contracts. "(3)
ADJUSTMENTS W^ITII RESPECT TO CERTAIN NON-LIFE INSLTI-
ANCE CONTRACTS.—For purposes of this subpart, if— " (A) any computation under this subpart is made by reference to a contract meeting the requirements of paragraph (2)(A) of this subsection, and " (B) part of the reserves for such contract are life insurance reserves, then, under regulations prescribed by the Secretary or his delegate, proper adjustment shall be made in the amount taken into account with respect to such contract for purposes of such computation. "SEC. 805. SPECIAL INTEREST DEDUCTION. "(a)
SPECIAL INTEREST DEDUCTION.—For
purposes of
the
tax
imposed by section 802 (and the tax imposed by section 811), there shall be allowed a special interest deduction determined as follows: "(1) Divide the amount of the adjusted net investment income (as defined in subsection (b)) by the amount of the required interest (as defined in subsection (c)). "(2) If the quotient obtained in paragraph (1) is 1.05 or more, the special interest deduction shall be zero. "(3) If the quotient obtained in paragraph (1) is 1.00 or less, the special interest deduction shall be an amount equal to 50 percent of the amount by which— " (A) the net investment income (reduced by the net investment income allocable to non-life insurance reserves), exceeds " (B) the reserve and other policy liability deduction for the taxable year. "(4) If the quotient obtained in paragraph (1) is more than 1.00 but less than 1.05, the special interest deduction shall be the amount obtained by multiplying— " (A) the amount by which (i) the net investiifient income (reduced by the net investment income allocable to non-life insurance reserves) exceeds (ii) the reserve and other policy liability deduction for the taxable year, by " (B) 10 times the difference between the figure 1.05 and the quotient obtained in paragraph (1). "(b) ADJUSTED N E T INVESTMENT INCOME.—For purposes of subsection (a)(1), the term 'adjusted net investment income' means— "(1) the net investment income (computed without the deduction for wdiolly-exempt interest allowed by section 803(c)(1)), minus "(2) 50 percent of the net investment income allocable to non-life insurance reserves.
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