[Congressional Record Volume 149, Number 115 (Wednesday, July 30, 2003)]
[Senate]
[Pages S10269-S10270]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BUNNING (for himself and Mr. Conrad):
  S. 1495. A bill to amend the Internal Revenue Code of 1986 to permit 
the consolidation of life insurance companies with other companies; to 
the Committee on Finance.
  Mr. BUNNING. Mr. President, I rise today to introduce legislation 
with my colleague, Senator Conrad, which will allow affiliated life and 
non-life insurance companies to file consolidated tax returns. The 
rules currently on the books do not allow such consolidation, for 
reasons that are outdated and no longer applicable.
  In general, consolidated return provisions under current law were 
enacted so that the members of an affiliated group of corporations 
could file a single tax return. The right to file a ``consolidated'' 
return is generally available irrespective of the nature or variety of 
the businesses conducted by the affiliated corporations. The purpose 
behind consolidated returns is simply to tax a complete business entity 
rather than its component parts individually. Whether an enterprise's 
businesses are operated as divisions within one corporation or as 
subsidiary corporations with a common parent company, a business entity 
should generally be taxed as a single entity and be allowed to file its 
return accordingly.
  Corporate groups that include life insurance companies, however, are 
denied the ability to file a single consolidated return until they have 
been affiliated for a least five years. Even after this five year 
period, they are subject to two additional limitations that do not 
apply to any other type of group: first, non-life insurance companies 
must be members of the affiliated group for five years before their 
losses may be used to offset life insurance company income, and second, 
non-life insurance affiliated losses, including current year losses and 
any carryover losses, that may offset life insurance company taxable 
income are limited to the lesser of 35 percent of life insurance 
company's taxable income or 35 percent of the non-life insurance 
company's losses.
  There are no sound reasons to deny affiliated groups that include 
life insurance companies the same unrestricted ability to file 
consolidated returns that is available to other financial 
intermediaries, and corporations in general. Allowing the members of an 
affiliated group of corporations to file a consolidated return prevents 
the business enterprise's structure from obscuring the fact that the 
true gain or loss of the business enterprise is the aggregate of each 
of the members of the affiliated group. The limitations contained in 
present law are so clearly without policy justification that they 
should be repealed.
  Our legislation will repeal the two five-year limitations for taxable 
years

[[Page S10270]]

beginning after this year, and it will phase out the 35 percent 
limitation over seven years. The staff of the Joint Committee on 
Taxation has recommended repeal of two of the three limitations 
addressed by my bill--on the grounds of needless complexity. The third 
limitation is, in effect, merely a minimum tax on life insurance 
company income. That limitation should have been repealed when the 
alternative minimum tax was enacted, and certainly has no place in the 
tax laws today.
  We hope our colleagues will join us as cosponsors of this bipartisan, 
much-needed legislation.
                                 ______