76 STAT. ]
PUBLIC LAW 8 7 - 8 3 4 - O C T. 16, 1962
1009
with property in, or liability arising out of activity in, or in connection with the lives or health of residents of, the United States, and "(2) would (subject to the modifications provided by paragraphs (1), (2), and (3) of subsection (b)) be taxed under subchapter L of this chapter if such income were the income of a domestic insurance corporation. This section shall apply only in the case of a controlled foreign corporation which receives, during any taxable year, premiums or other consideration in respect of the reinsurance, and the issuing, of insurance and annuity contracts described in paragraph (1) in excess of 5 percent of the total of premiums and other consideration received during such taxable year m respect of all reinsurance and issuing of insurance and annuity contracts. " (b) SPECIAL RULES.—For purposes of subsection (a) — "(1) I n the application of part I of subchapter L, life insurance company taxable income is the gain from operations as defined in section 809(b). 26 USC 809. "(2) A corporation which would, if it were a domestic insurance corporation, be taxable under part II of subchapter L 26 USC 821-826; shall apply subsection (a) as if it were taxable under part III ^Q^ggg^' *^'*' of subchapter L. " (3) The following provisions of subchapter L shall not apply: " (A) Section 809(d)(4) (operations loss deduction). " (B) Section 809(d)(5) (certain nonparticipating contracts). " (C) Section 809(d)(6) (group life, accident, and health insurance). " (D) Section 809(d) (10) (small business deduction). " (E) Section 817(b) (gain on property held on December 31, 1958, and certain substituted property acquired after 1958). " (F) Section 832(b)(5) (certain capital losses). " (4) The items referred to in— " (A) section 809(c)(1) (relating to gross amount of premiums and other considerations), " (B) section 809(c)(2) (relating to net decrease in reserves), " (C) section 809(d)(2) (relating to net increase in reserves), and " (D) section 832(b)(4) (relating to premiums earned on insurance contracts), shall be taken into account only to the extent they are in respect of any reinsurance or the issuing of any insurance or annuity contract described in subsection (a)(1). "(5) All items of income, expenses, losses, and deductions (other than those taken into account under paragraph (4)) shall be properly allocated or apportioned under regulations prescribed by the Secretary or his delegate. "SEC. 954. FOREIGN BASE COMPANY INCOME. " (a) FOREIGN BASE COMPANY INCOME.—For purposes of section
952(a)(2), the term 'foreign base company income' means for any taxable year the sum of— "(1) the foreign personal holding company income for the taxable year (determined under subsection (c) and reduced as provided in subsection (b)(5)), "(2) the foreign base company sales income for the taxable year (determinea under subsection (d) and reduced as provided m subsection (b)(5)), and 78135 0-63—67
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