1.Consolidation of life
insurance companies with other companies permitted
(a)Section 1504(b) of
the Internal Revenue Code of 1986 (defining includible corporation) is amended
by striking paragraph (2) and by redesignating paragraphs (3) through (8) as
paragraphs (2) through (7), respectively.
(b)
(1)Section 1503 of the Internal Revenue Code
of 1986 is amended by striking subsection (c) (relating to special rule for
application of certain losses against income of insurance companies taxed under
section 801) and by redesignating subsections (d), (e), and (f) as subsections
(b), (c), and (d), respectively.
(2)Section 1504 of such Code is amended by
striking subsection (c) and by redesignating subsections (d), (e), and (f) as
subsections (c), (d), and (e), respectively.
(3)Section 243(b)(2)(A) of such Code is
amended by striking sections 1504(b)(2), 1504(b)(4), and 1504(c)
and inserting section 1504(b)(3)
.
(4)Section 805(a)(4)(E) of such Code is
amended by striking 1504(b)(3)
and inserting
1504(b)(2)
.
(5)Section 818(e)(1) of such Code is amended
to read as follows:
(1)Items of
companies other than insurance companiesIf an affiliated group includes members
which are and which are not taxed under section 801, all items of the members
of such group which are not taxed under section 801 shall not be taken into
account in determining the amount of the tentative LICTI of members of such
group which are taxed under section
801.
.
(6)Section 832(b)(5)(D)(ii)(II) of such Code
is amended by striking 1504(b)(3)
and inserting
1504(b)(2)
.
(7)Section 864(e)(5)(A) of such Code is
amended by striking paragraph (4)
and inserting paragraph
(3)
.
(8)Section 936(i)(5)(A) of such Code is
amended by striking section 1504(b)(3) or (4)
and inserting
section 1504(b)(2) or (3)
.
(9)Section 952(c)(1)(B)(vii)(II) of such Code
is amended by striking 1504(b)(3)
and inserting
1504(b)(2)
.
(10)Section 953(d)(3) of such Code is amended
by striking 1503(d)
and inserting 1503(c)
.
(11)Section 954(h)(4)(F)(ii) of such Code is
amended by striking 1504(b)(3)
and inserting
1504(b)(2)
.
(12)Section 6166(b)(10)(B)(ii)(V) of such Code
is amended by striking 1504(b)(3)
and inserting
1504(b)(2)
.
(c)The amendments made by
this section shall apply to taxable years beginning after December 31,
2004.
2.Phase-In of
application of certain losses against income of insurance companies
(a)
(1)For taxable years
beginning after December 31, 2004, and before January 1, 2011, if—
(A)an affiliated group includes 1 or more
domestic insurance companies subject to tax under section 801 of the Internal
Revenue Code of 1986, and
(B)the consolidated taxable income of the
members of the group not taxed under such section 801 results in a consolidated
net operating loss for such taxable year,
then, under regulations prescribed by
the Secretary of the Treasury or his delegate, the amount of such loss which
cannot be absorbed in the applicable carryback periods against the taxable
income of such members not taxed under such section 801 shall be taken into
account in determining the consolidated taxable income of the affiliated group
for such taxable year to the extent of the applicable percentage of such loss
or the applicable percentage of the taxable income of the members taxed under
such section 801, whichever is less. The unused portion of such loss shall be
available as a carryover, subject to the same limitations (but determined based
on the applicable percentage with respect to the year to which carried and
applicable to the sum of the loss for the carryover year and the loss (or
losses) carried over to such year), in applicable carryover years.(2)For purposes of
paragraph (1), the applicable percentage shall be determined in accordance with
the following table:
The
applicable
For taxable years beginning
in:percentage is:
200540
200650
200760
200870
200980
201090.
(b)No carryback
before January 1, 2005To the
extent that a consolidated net operating loss is allowed or increased by reason
of this section or the amendments made by this Act, such loss (or increase in
such loss, as the case may be) may not be carried back to a taxable year
beginning before January 1, 2005.
(c)No affiliated group
shall terminate solely as a result of this section or the amendments made by
this Act.
(d)Subsidiary stock
basis adjustmentsA member
corporation’s basis in the stock of a subsidiary corporation shall be adjusted
upon consolidation to reflect the preconsolidation income, gain, deduction,
loss, distributions, and other relevant amounts during a period when such
corporations were members of an affiliated group (determined without regard to
section 1504(b)(2) of the Internal Revenue Code of 1986 as in effect on the day
before the date of enactment of this Act) but were not included in a
consolidated return of such group by operation of section 1504(c)(2)(A) of such
Code (as in effect on the day before the date of the enactment of this
Act).
(e)Waiver of 5-Year
waiting periodAn automatic
waiver from the 5-year waiting period for reconsolidation provided in section
1504(a)(3) of the Internal Revenue Code of 1986 shall be granted to any
corporation which was previously an includible corporation but was subsequently
deemed a nonincludible corporation as a result of becoming a subsidiary of a
corporation which was not an includible corporation solely by operation of
section 1504(c)(2) of such Code (as in effect on the day before the date of
enactment of this Act), subject to such conditions as the Secretary may
prescribe.