78 STAT. ]
PUBLIC LAW 88-571-SEPT. 2, 1964
857
Public Law 88-571 AN ACT
September 2, 1964
To amend the Internal Revenue Code of 1954 to correct certain inequities with respect to the taxation of life insurance companies, and for other purposes.
[H. R. 5739]
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) subsection Taxes. Life insurance (e) of section 812 of the Internal Revenue Code of 1954 (rules relat- companies. ing to new companies) is amended to read as follows: 73 Stat. 128 "(e) N E W COMPANY DEFINED.—For purposes of this part, a life ^^ ^^^" insurance company is a new company for any taxable year only if such taxable year begins not more than 5 years after the first day on which it (or any predecessor, if section 381(c) (22) applies or would ^^ "^^ ^^'• have applied if in effect) was authorized to do business as an insurance company." (b) The amendment made by subsection (a) shall apply to a loss from operations for taxable years beginning after December 31, 1955; except that, in the case of a nonqualified corporation as defined in section 812(e)(2)(B) of the Internal Revenue Code of 1954 as in effect before such amendment— (1) a loss from operations for a taxable year beginning in 1956 shall not be an operating loss carryover to the years 1962 and 1963, and there shall be no reduction in the portion of such loss from operations which may be carried to 1964 by reason of an offset with respect to the year 1962 or 1963, and (2) a loss from operations for a taxable year beginning in 1957 shall not be an operating loss carryover to the year 1963, and there shall be no reduction in the portion of such loss from operations which may be carried to 1964 and 1965 by reason of an offset with respect to the year 1963. SEC. 2. Section 815(b)(2)(A) (ii) of the Internal Revenue Code of 1954 (relating to additions to shareholders surplus account) is 26 USC sis. amended by adding at the end thereof the following: "reduced (in the case of a taxable year beginning after December 31, 1961) by the amount referred to in clause (i),". SEC. 3. (a) Section 815(d) of the Internal Revenue Code of 1954 (relating to special rules with respect to distributions to shareholders) is amended by adding at the end thereof the following new paragraph: " (5) REDUCTION OF POLICYHOLDERS SURPLUS ACCOUNT FOR CERTAIN UNUSED DEDUCTIONS. If—
" (A) an amount added to the policyholders surplus account for any taxable year increased (or created) a loss from operations for such year, and " (B) any portion of the increase (or amount created) in the loss from operations referred to in subparagraph (A) did not reduce the life insurance company taxable income for any taxable year to which such loss was carried, the policyholders surplus account for the taxable year referred to in subparagraph (A) shall be reduced by the amount described in subparagraph (B). " (b) Section 6501 of such Code (relating to limitations on assess- 26 USC esoi. ment and collection) is amended by redesignating subsection (k) as subsection (1), and by inserting after subsection (j) the following new subsection: " (k) REDUCTIONS OF POLICYHOLDERS SURPLUS ACCOUNT OF L I F E INSURANCE COMPANIES.—In the case of a deficiency attributable to
the application to the taxpayer of section 815(d)(5) (relating to reductions of policyholders surplus account of life insurance companies
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