PUBLIC LAW 97-248—SEPT. 3, 1982
96 STAT. 543
PART III—EXCESS INTEREST; AMOUNTS RECEIVED UNDER ANNUITY CONTRACTS; FLEXIBLE PREMIUM CONTRACTS; COMPUTATION OF RESERVES SKC. 264. ALLOWANC E OF DKDUCTION FOR KXCKSS INTKRKST.
(a) IN GENERAL.—Subsection (e) of section 805 (defining interest paid) is amended by adding a t the end thereof the following new paragraph: "(5) QUALIFIED GUARANTEED INTEREST.—Qualified g u a r a n t e e d
interest (within the m e a n i n g of subsection (f))". (b) QUALIFIED GUARANTEED INTEREST D E F I N E D. — S e c t i o n 805 (relat-
ing to policy and other contract liability requirements) is amended by adding a t the end thereof the following new subsection: "(D
QUALIFIED
GUARANTEED
INTEREST
AND QUALIFIED
CON-
TRACTS.—For purposes of this section— "(1) IN GENERAL.—The term 'qualified g u a r a n t e e d interest' means any a m o u n t in the n a t u r e of interest for the taxable year on qualified contracts, b u t only if such a m o u n t is determined pursuant to— "(A) a stated rate of interest which is g u a r a n t e e d — "(i) before the beginning of the period for which the interest accrues, and "(ii) for a period of not less than 12 months (or for a period ending not earlier than the close of the taxable year in which the contract was issued), or "(B) a rate or rates of interest which— "(i) meet the requirements of clause (i) of subparagraph (A), and "(ii) is determined under a formula or other method the term s of which— "(I) during the period referred to in subparagraph (A)(ii) may not be changed by the taxpayer, and "(II) a r e independent of the experience of the taxpayer. "(2)
QUALIFIED
CONTRACT.—The
term
'qualified
contract'
means any a n n u i t y contract (other than any contract described in subsection (d)) which— "(A) involves (at the time the qualified interest is credited under the contract) life contingencies, "(B) provides no right under State law for the policyholder to participate in the divisible surplus of the taxpayer, and "(C) provides that the tax p a y e r may from time to time credit a m o u n t s in the n a t u r e of interest in excess of a m o u n t s computed on the basis of any rate or rates g u a r a n teed in the contract at the time it was entered into. "(8) SPECIAL RULE I-^OR PARTICIPATING CONTRACTS.—
"(A) IN GENERAL.—In the case of an a n n u i t y contract which is not a qualified contract solely because it fails to satisfy the requirements of subparagraph (B) of paragraph (2), such contract shall be treated as a qualified contract and the a m o u n t taken into account as qualified g u a r a n t e e d interest with respect to such contract shall be equal to the sum of—
26 USC 805.
�
