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 (c), (d), and (e), 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—
(1)in the case of an
affiliated group with respect to which an election is in effect under section
1504(c)(2) of the Internal Revenue Code of 1986 (as in effect before the date
of the enactment of this Act) for the first taxable year ending on or after the
date of the enactment of this Act, taxable years beginning after such date,
and
(2)in the case of an
affiliated group the common parent of which elects (at such time and in such
manner as the Secretary may provide) to have the amendments made by this
section apply to any taxable year beginning after the date of the enactment of
this Act (and not described in paragraph (3)), such taxable year and all
subsequent taxable years, and
(3)in any other case,
taxable years beginning after the date which is 3 years after the date of the
enactment of this Act.
2.Phase-in of
application of certain losses against income of insurance companies
(a)
(1)In the case of the first taxable year of an affiliated
group to which the amendments made by section 1 apply and each of the 5
succeeding taxable years, 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:
In the case of:The applicable
percentage
is:
The first
taxable year40
The second
taxable year50
The third
taxable year60
The fourth
taxable year70
The fifth
taxable year80
The sixth
taxable year90.
(b)No carryback
before effective dateTo 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 any taxable year
before the first taxable year of the affiliated group to which the amendments
made by section 1 apply.
(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.