§818 — Other definitions and special rules
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Statute Text — 26 U.S.C. §818
For purposes of this part, the term “pension plan contract” means any contract—
entered into with trusts which (as of the time the contracts were entered into) were deemed to be trusts described in section 401(a) and exempt from tax under section 501(a) (or trusts exempt from tax under section 165 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws);
entered into under plans which (as of the time the contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939;
provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (17), (19), (20), (22), (26), and (27) of section 401(a);
purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) (or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws), or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing;
entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b); or
purchased by—
a governmental plan (within the meaning of section 414(d)) or an eligible deferred compensation plan (within the meaning of section 457(b)), or
the Government of the United States, the government of any State or political subdivision thereof, or by any agency or instrumentality of the foregoing, or any organization (other than a governmental unit) exempt from tax under this subtitle, for use in satisfying an obligation of such government, political subdivision, agency or instrumentality, or organization to provide a benefit under a plan described in subparagraph (A).
In the case of a life insurance company—
in applying section 1231(a), the term “property used in the trade or business” shall be treated as including only—
property used in carrying on an insurance business, of a character which is subject to the allowance for depreciation provided in section 167, held for more than 1 year, and real property used in carrying on an insurance business, held for more than 1 year, which is not described in section 1231(b)(1)(A), (B), or (C), and
property described in section 1231(b)(2), and
in applying section 1221(a)(2), the reference to property used in trade or business shall be treated as including only property used in carrying on an insurance business.
In the case of property held by the taxpayer on
December 31, 1958
, if—
the fair market value of such property on such date exceeds the adjusted basis for determining gain as of such date, and
the taxpayer has been a life insurance company at all times on and after
December 31, 1958
,
the gain on the sale or other disposition of such property shall be treated as an amount (not less than zero) equal to the amount by which the gain (determined without regard to this subsection) exceeds the difference between the fair market value on
December 31, 1958
, and the adjusted basis for determining gain as of such date.
In the case of property acquired after
December 31, 1958
, and having a substituted basis (within the meaning of section 1016(b))—
for purposes of paragraph (1), such property shall be deemed held continuously by the taxpayer since the beginning of the holding period thereof, determined with reference to section 1223,
the fair market value and adjusted basis referred to in paragraph (1) shall be that of that property for which the holding period taken into account includes
December 31, 1958
,
paragraph (1) shall apply only if the property or properties the holding periods of which are taken into account were held only by life insurance companies after
December 31, 1958
, during the holding periods so taken into account,
the difference between the fair market value and adjusted basis referred to in paragraph (1) shall be reduced (to not less than zero) by the excess of (i) the gain that would have been recognized but for this subsection on all prior sales or dispositions after
December 31, 1958
, of properties referred to in subparagraph (C), over (ii) the gain which was recognized on such sales or other dispositions, and
the basis of such property shall be determined as if the gain which would have been recognized but for this subsection were recognized gain.
For purposes of paragraphs (1) and (2), the term “property” does not include insurance and annuity contracts and property described in paragraph (1) of section 1221(a).
For purposes of this part, the term “insurance or annuity contract” includes any contract supplementary thereto.
If an election under section 1504(c)(2) is in effect with respect to an affiliated group for the taxable year, all items of the members of such group which are not life insurance companies shall not be taken into account in determining the amount of the tentative LICTI of members of such group which are life insurance companies.
In the case of a life insurance company filing or required to file a consolidated return under section 1501 with respect to any affiliated group for any taxable year, any determination under this part with respect to any dividend paid by one member of such group to another member of such group shall be made as if such group was not filing a consolidated return.
Under regulations, in applying sections 861, 862, and 863 to a life insurance company, the deduction for policyholder dividends (determined under section 808(c)), reserve adjustments under subsections (a) and (b) of section 807, and death benefits and other amounts described in section 805(a)(1) shall be treated as items which cannot definitely be allocated to an item or class of gross income.
On or before September 15, 1985, any life insurance company may elect to treat items described in paragraph (1) as properly apportioned or allocated among items of gross income to the extent (and in the manner) prescribed in regulations.
Any election under subparagraph (A), once made, may be revoked only with the consent of the Secretary.
For purposes of part I of subchapter N, items described in any paragraph of section 807(c) shall be treated as amounts which are not interest.
For purposes of this part—
Any reference to a life insurance contract shall be treated as including a reference to a qualified accelerated death benefit rider on such contract.
For purposes of this subsection, the term “qualified accelerated death benefit rider” means any rider on a life insurance contract if the only payments under the rider are payments meeting the requirements of section 101(g).
Paragraph (1) shall not apply to any rider which is treated as a long-term care insurance contract under section 7702B.
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.818-1 Taxable years affected
- Treas. Reg. §Treas. Reg. §1.818-2 Accounting provisions
- Treas. Reg. §Treas. Reg. §1.818-2(a) Method of accounting.
- Treas. Reg. §Treas. Reg. §1.818-2(b) Adjustments required if accrual method of accounting was not used in 1957.
- Treas. Reg. §Treas. Reg. §1.818-3 Amortization of premium and accrual of discount
- Treas. Reg. §Treas. Reg. §1.818-3(a) In general.
- Treas. Reg. §Treas. Reg. §1.818-3(b) Acquisitions before January 1, 1958.
- Treas. Reg. §Treas. Reg. §1.818-3(c) Acquisitions after December 31, 1957.
- Treas. Reg. §Treas. Reg. §1.818-3(d) Convertible evidences of indebtedness.
- Treas. Reg. §Treas. Reg. §1.818-3(e) Adjustments to basis.
- Treas. Reg. §Treas. Reg. §1.818-3(f) Denial of double inclusion.
- Treas. Reg. §Treas. Reg. §1.818-3(i) §1.818-3(i)
- Treas. Reg. §Treas. Reg. §1.818-5 Short taxable years
- Treas. Reg. §Treas. Reg. §1.818-5(a) The interest paid (as defined in section 805(e) and § 1.
- Treas. Reg. §Treas. Reg. §1.818-5(b) The current earnings rate for the taxable year in which the short period occurs shall be determined by dividing the taxpayer's investment yield, as determined on an annual basis under subdivision (ii) of this subparagraph, by the mean of the taxpayer's assets at the beginning and end of the short period.
- Treas. Reg. §Treas. Reg. §1.818-5(c) The adjusted life insurance reserves shall be determined as provided in section 805(c), and the pension plan reserves shall be determined as provided in section 805(d).
- Treas. Reg. §Treas. Reg. §1.818-5(d) Special rules.
- Treas. Reg. §Treas. Reg. §1.818-5(v) The taxable investment income for the short period shall be an amount (not less than zero) equal to the life insurance company's share of each and every item of investment yield, as determined under subdivision (ii) of this subparagraph, reduced by the items described in section 804(a)(2) (A) and (B).
- Treas. Reg. §Treas. Reg. §1.818-6 Transitional rule for change in method of accounting
- Treas. Reg. §Treas. Reg. §1.818-6(a) In general.
- Treas. Reg. §Treas. Reg. §1.818-6(b) Recomputation of 1957 taxes.
- Treas. Reg. §Treas. Reg. §1.818-6(c) Treatment of decrease.
- Treas. Reg. §Treas. Reg. §1.818-6(d) Treatment of increase—(1) In general.
- Treas. Reg. §Treas. Reg. §1.818-6(e) Modifications of 1957 tax computation.
- Treas. Reg. §Treas. Reg. §1.818-6(f) Illustration of principles.