§831 — Tax on insurance companies other than life insurance companies
52 cases·10 followed·9 questioned·1 limited·1 overruled·31 cited—19% support
Statute Text — 26 U.S.C. §831
Taxes computed as provided in section 11 shall be imposed for each taxable year on the taxable income of every insurance company other than a life insurance company.
In lieu of the tax otherwise applicable under subsection (a), there is hereby imposed for each taxable year on the income of every insurance company to which this subsection applies a tax computed by multiplying the taxable investment income of such company for such taxable year by the rates provided in section 11(b).
This subsection shall apply to every insurance company other than life if—
the net written premiums (or, if greater, direct written premiums) for the taxable year do not exceed $2,200,000,
such company meets the diversification requirements of subparagraph (B), and
such company elects the application of this subsection for such taxable year.
The election under clause (iii) shall apply to the taxable year for which made and for all subsequent taxable years for which the requirements of clauses (i) and (ii) are met. Such an election, once made, may be revoked only with the consent of the Secretary.
An insurance company meets the requirements of this subparagraph if—
no more than 20 percent of the net written premiums (or, if greater, direct written premiums) of such company for the taxable year is attributable to any one policyholder, or
such insurance company does not meet the requirement of subclause (I) and no person who holds (directly or indirectly) an interest in such insurance company is a specified holder who holds (directly or indirectly) aggregate interests in such insurance company which constitute a percentage of the entire interests in such insurance company which is more than a de minimis percentage higher than the percentage of interests in the relevant specified assets with respect to such insurance company held (directly or indirectly) by such specified holder.
For purposes of clause (i)(II), any interest in the insurance company referred to in such clause which is held (directly or indirectly) by an individual who is a spouse of the specified holder, and who is a citizen of the United States, shall be treated as held by the specified holder.
For purposes of this subparagraph, the term “specified holder” means, with respect to any insurance company, any individual who holds (directly or indirectly) an interest in such insurance company and who—
is a lineal descendent (including by adoption) of an individual who holds an interest (directly or indirectly) in the specified assets with respect to such insurance company or of such individual’s spouse,
is a spouse of any lineal descendent described in subclause (I), or
is not a citizen of the United States and is a spouse of an individual who holds an interest (directly or indirectly) in the specified assets with respect to such insurance company.
For purposes of this subparagraph—
The term “relevant specified assets” means, with respect to any specified holder with respect to any insurance company, the aggregate amount of the specified assets, with respect to such insurance company, any interest in which is held (directly or indirectly) by any spouse or specified relation of such specified holder. Such term shall not include any specified asset solely by reason of an interest in such asset which was acquired by such spouse or specified relation by bequest, devise, or inheritance from a decedent during the taxable year of the insurance company or the preceding taxable year. For purposes of this subclause, the term “specified relation” means any individual with respect to whom the specified holder bears a relationship described in subclause (I) or (II) of clause (iii).
The term “specified assets” means, with respect to any insurance company, the trades or businesses, rights, or assets with respect to which the net written premiums (or direct written premiums) of such insurance company are paid.
An indirect interest includes any interest held through a trust, estate, partnership, or corporation.
Except as otherwise provided by the Secretary in regulations or other guidance, 2 percentage points or less shall be treated as de minimis.
For purposes of this paragraph—
in determining whether any company is described in clause (i) of subparagraph (A), such company shall be treated as receiving during the taxable year amounts described in such clause (i) which are received during such year by all other companies which are members of the same controlled group as the insurance company for which the determination is being made, and
in determining the attribution of premiums to any policyholder under subparagraph (B)(i), all policyholders which are related (within the meaning of section 267(b) or 707(b)) or are members of the same controlled group shall be treated as one policyholder.
For purposes of clause (i), the term “controlled group” means any controlled group of corporations (as defined in section 1563(a)); except that—
“more than 50 percent” shall be substituted for “at least 80 percent” each place it appears in section 1563(a), and
subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply.
In the case of reinsurance or any fronting, intermediary, or similar arrangement, the term “policyholder” means each policyholder of the underlying direct written insurance with respect to such reinsurance or arrangement.
In the case of any taxable year beginning in a calendar year after 2015, the dollar amount set forth in subparagraph (A)(i) shall be increased by an amount equal to—
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting “calendar year 2013” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If the amount as adjusted under the preceding sentence is not a multiple of $50,000, such amount shall be rounded to the next lowest multiple of $50,000.
For purposes of this part, a net operating loss (as defined in section 172) shall not be carried—
to or from any taxable year for which the insurance company is not subject to the tax imposed by subsection (a), or
to any taxable year if, between the taxable year from which such loss is being carried and such taxable year, there is an intervening taxable year for which the insurance company was not subject to the tax imposed by subsection (a).
For purposes of this section, the term “insurance company” has the meaning given to such term by section 816(a).
Every insurance company for which an election is in effect under subsection (b) for any taxable year shall furnish to the Secretary at such time and in such manner as the Secretary shall prescribe such information for such taxable year as the Secretary shall require with respect to the requirements of subsection (b)(2)(A)(ii).
For taxation of foreign corporations carrying on an insurance business within the United States, see section 842.
For exemption from tax for certain insurance companies other than life, see section 501(c)(15).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.831-1 Tax on insurance companies (other than life or mutual), mutual marine insurance companies, and mutual fire insurance companies issuing perpetual policies
- Treas. Reg. §Treas. Reg. §1.831-1(a) All insurance companies, other than life or mutual or foreign insurance companies not carrying on an insurance business within the United States, and all mutual marine insurance companies and mutual fire insurance companies exclusively issuing either perpetual policies, or policies for which the sole premium charged is a single deposit which, except for such deduction of underwriting costs as may be provided, is refundable upon cancellation or expiration of the policy, are subject to the tax imp
- Treas. Reg. §Treas. Reg. §1.831-1(b) All provisions of the Code and of the regulations in this part not inconsistent with the specific provisions of section 831 are applicable to the assessment and collection of the tax imposed by section 831(a), and insurance companies are subject to the same penalties as are provided in the case of returns and payment of income tax by other corporations.
- Treas. Reg. §Treas. Reg. §1.831-1(c) Since section 832 provides that the underwriting and investment exhibit of the annual statement approved by the National Convention of Insurance Commissioners shall be the basis for computing gross income and since the annual statement is rendered on the calendar year basis, the returns under section 831 shall be made on the basis of the calendar year and shall be on Form 1120.
- Treas. Reg. §Treas. Reg. §1.831-1(d) Foreign insurance companies not carrying on an insurance business within the United States are not taxable under section 831 but are taxable as other foreign corporations.
- Treas. Reg. §Treas. Reg. §1.831-1(e) Insurance companies are subject to both normal tax and surtax.
- Treas. Reg. §Treas. Reg. §1.831-2 Taxable years affected
- Treas. Reg. §Treas. Reg. §1.831-3 Tax on insurance companies (other than life or mutual), mutual marine insurance companies, mutual fire insurance companies issuing perpetual policies, and mutual fire or flood insurance companies operating on the basis of premium deposits; taxable years beginning after December 31, 1962
- Treas. Reg. §Treas. Reg. §1.831-3(a) All insurance companies, other than life or mutual or foreign insurance companies not carrying on an insurance business within the United States, and all mutual marine insurance companies and mutual fire or flood insurance companies exclusively issuing perpetual policies or whose principal business is the issuance of policies for which the premium deposits are the same regardless of the length of the term for which the policies are written, are subject to the tax imposed by section 831 if the un
- Treas. Reg. §Treas. Reg. §1.831-3(b) All provisions of the Code and of the regulations in this part not inconsistent with the specific provisions of section 831 are applicable to the assessment and collection of the tax imposed by section 831(a), and insurance companies are subject to the same penalties as are provided in the case of returns and payment of income tax by other corporations.
- Treas. Reg. §Treas. Reg. §1.831-3(c) Since section 832 provides that the underwriting and investment exhibit of the annual statement approved by the National Convention of Insurance Commissioners shall be the basis for computing gross income and since the annual statement is rendered on the calendar year basis, the returns under section 831 shall be made on the basis of the calendar year and shall be on Form 1120.
- Treas. Reg. §Treas. Reg. §1.831-3(d) Foreign insurance companies not carrying on an insurance business within the United States are not taxable under section 831 but are taxable as other foreign corporations.
- Treas. Reg. §Treas. Reg. §1.831-3(e) Insurance companies are subject to both normal tax and surtax.
52 Citing Cases
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
Not Insurance Because we find that Consolidated failed to distribute risk and was not selling insurance in the commonly accepted sense, we need not decide whether its transactions involved insurance risk or risk shifting.
These companies can elect to be taxed under section 831(b), which excludes premiums from their taxable income.
Their position is that Feedback is a valid insurance company that qualified and properly elected to be taxed under section 831(b); that all the policies covered insurable risks; that all premiums were actuarially determined; and that Feedback distributed risk by ensuring at least 30% ofits premium income came from unrelated parties participating in the Pan American program.
Their position is that Feedback is a valid insurance company that qualified and properly elected to be taxed under section 831(b); that all the policies covered insurable risks; that all premiums were actuarially determined; and that Feedback distributed risk by ensuring at least 30% ofits premium income came from unrelated parties participating in the Pan American program.
Despite the attempts of Consolidated to make its transactions look like traditional insurance and take advantage of the apparent loophole at the intersection of section 831 and captive-insurance caselaw, the premiums paid to - 49 - [*49] Consolidated and deducted by the Caylor entities are not “insurance” for federal tax purposes.
Despite the attempts of Consolidated to make its transactions look like traditional insurance and take advantage of the apparent loophole at the intersection of section 831 and captive-insurance caselaw, the premiums paid to - 49 - [*49] Consolidated and deducted by the Caylor entities are not “insurance” for federal tax purposes.
Despite the attempts of Consolidated to make its transactions look like traditional insurance and take advantage of the apparent loophole at the intersection of section 831 and captive-insurance caselaw, the premiums paid to - 49 - [*49] Consolidated and deducted by the Caylor entities are not “insurance” for federal tax purposes.
831.2206 (1991). The CSRS reduced the lump-sum credits of the participants by the deemed deposit or redeposit but regarded the unreduced amount as taxable to the participants for Federal income tax purposes. Id. Petitioners argue that, if we hold that Mr. Logsdon's lump-sum credit must be included in their gross income, then the amounts repres
The notice determined that RMIC was not an “insurance company” for purposes of section 831, that the transactions generating its alleged premium income “are not insurance transactions,” and that RMIC was ineligible to exclude those amounts from its gross income under section 831(b).
831.303 (2001). Amounts deposited under 5 U.S.C. sec. 8334(c) allow civil service employees to make up for years in which there were no contributions from their salaries. See 5 C.F.R. sec. 831.303. Deposited amounts take the place ofafter-tax contributions that were not originally made. See 5 U.S.C. sec. 8334(a), (c). Only the portion ofa dist
Under these statutory provisions, gross:income includes amounts earned from investment and underwriting income, "computed on the basis ofthe underwriting and investment exhibit ofthe annual statement approved by the National Association ofInsurance Commissioners". Sec. 832(b)(1)(A). Underwriting income is defined as "the premiums earned o
Under these statutory provisions, gross income includes amounts earned from investment and underwriting income, “computed on the basis of the underwriting and investment exhibit of the annual statement approved by the National Association of Insurance Commissioners”. Sec. 832(b)(1)(A). Underwriting income is defined as “the premiums earne
Taxable income equals gross income less allowable deductions. See sec. 832(a). Gross income includes amounts earned from investment and underwriting income, “computed on the basis of the underwriting and investment exhibit of the annual statement approved by the National Association of Insurance Commissioners”. Sec. 832(b)(1)(A). Underwri
DEDUCTIONS ALLOWED.--In computing the taxable income of an insurance company subject to the tax imposed by section 831, there shall be allowed as deductions: (1) all ordinary and necessary expenses incurred, as provided in section 162 (relating to trade or business expenses); * * * * * * * (4) losses incurred, as defined in subsection (b)(5) of this section; 18 Sec.
lthough in 1994 petitioner requested of respondent's Appeals Office that petitioner be treated as if it had requested a change in method of accounting.2 The parties have since stipulated that the home warranty contracts described above are insurance contracts; petitioner is an "insurance company other than a life insurance company" as described in section 831; and the revenue generated from the insurance contracts is "gross income" as defined in section 832(b)(1) and (3).
Section 831 imposes taxes computed as provided in section 11 on the taxable income of insurance companies other than life insurance companies.14 Section 832(c) provides deductions for purposes of computing the taxable income of an insurance company, inter alia, for all ordinary and necessary expenses incurred and for losses incurred. Sec. 832(c)(1)
Section 831 imposes taxes computed as provided in section 11 on the taxable income of insurance companies other than life insurance companies.14 Section 832(c) provides deductions for purposes of computing the taxable income of an insurance company, inter alia, for all ordinary and necessary expenses incurred and for losses incurred. Sec. 832(c)(1)