[Federal Register Volume 67, Number 106 (Monday, June 3, 2002)]
[Proposed Rules]
[Pages 38214-38218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-13848]


-----------------------------------------------------------------------

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[REG-248110-96]
RIN 1545-AY48


Guidance Under Section 817A Regarding Modified Guaranteed 
Contracts

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Notice of proposed rulemaking and notice of public hearing.

-----------------------------------------------------------------------

[[Page 38215]]

SUMMARY: This document contains proposed regulations affecting 
insurance companies that define the interest rate to be used with 
respect to certain insurance contracts that guarantee higher returns 
for an initial, temporary period. Specifically, the proposed 
regulations define the appropriate interest rate to be used in the 
determination of tax reserves and required interest for certain 
modified guaranteed contracts. The proposed regulations also address 
how temporary guarantee periods that extend past the end of a taxable 
year are to be taken into account. This document also provides notice 
of a public hearing on these proposed regulations.

DATES: Written or electronic comments must be received by August 20, 
2002. Requests to speak (with outlines of oral comments to be 
discussed) at the public hearing scheduled for August 27, 2002, at 10 
a.m., must be received by August 6, 2002.

ADDRESSES: Send submissions to: CC:ITA:RU (REG-248110-96), room 5226, 
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, 
DC 20044. Comments may be hand delivered Monday through Friday between 
the hours of 8 a.m. and 5 p.m. to CC:ITA:RU (REG-248110-96), Courier's 
Desk, Internal Revenue Service, 1111 Constitution Avenue NW, 
Washington, DC. Alternatively, taxpayers may submit comments 
electronically directly to the IRS internet site at: http://www.irs.gov/regs. The public hearing will be held in Room 4718, 1111 
Constitution Avenue, NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Ann H. 
Logan, 202-622-3970. Concerning the hearing, LaNita Van Dyke of the 
Regulations Unit, 202-622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

History

    Section 817A was added by section 1612 of the Small Business Job 
Protection Act of 1996, Public Law 104-188, 110 Stat. 1755. Section 
817A is effective for taxable years beginning after December 31, 1995. 
See Small Business Job Protection Act section 1612(c)(1).
    Previous guidance on the matters addressed by these proposed 
regulations is provided in Notice 97-32 (1997-1 C.B. 420), which 
specifies the appropriate interest rate to be used during the temporary 
guarantee period of modified guaranteed contracts. Generally, the 
specified rate is the greater of the interest rate assumed by the 
insurance company to determine future guaranteed benefits or Moody's 
Corporate Bond Yield Average--Monthly Average Corporates (Moody's 
rate). For equity-indexed modified guaranteed contracts whose market 
value adjustment is based on the performance of stocks, other equity 
instruments or equity-based derivatives, the specified rate is obtained 
by multiplying whichever of the two rates is greater by 1.1. Notice 97-
32 was to be effective pending the publication of further guidance. 
Comments received after publication of the Notice indicated the need 
for further consideration of the appropriate rate to be used.

Interest Rates Affecting Modified Guaranteed Contracts

    These proposed regulations govern the interest rate to be used when 
life insurance companies issue certain modified guaranteed annuity and 
life insurance contracts. A modified guaranteed contract temporarily 
guarantees a higher return than the permanently guaranteed crediting 
rate, in exchange for shifting additional investment risk to the 
policyholder in the form of a market value adjustment. The temporary 
guarantee may be a fixed rate (non-equity-indexed modified guaranteed 
contracts) or a rate based on bond or equity yields (equity-indexed 
modified guaranteed contracts). During the temporary guarantee period, 
the amount paid to the policyholder upon surrender is increased or 
decreased by a market value adjustment, which is determined by a 
formula in the modified guaranteed contract. Modified guaranteed 
contracts can be issued out of a life insurance company's general 
account or one or more segregated accounts.
    Section 817A provides special tax treatment for certain modified 
guaranteed contracts issued out of a segregated account. For this 
purpose, the term modified guaranteed contract is defined as an 
annuity, life insurance, or pension plan contract (other than a 
variable contract described in section 817) under which all or part of 
the amounts received under the contract are allocated to a segregated 
account. Assets and reserves in this segregated account must be valued 
from time to time with reference to market values for annual statement 
purposes. Further, a modified guaranteed contract must provide either 
for a net surrender value or for a policyholder's fund (as defined in 
section 807(e)(1)). If only a portion of a contract is not described in 
section 817, such portion is treated as a separate contract for 
purposes of applying section 817A.
    The tax reserves for a modified guaranteed contract are computed 
under either sections 807(c)(3) or (d)(2), depending upon whether the 
reserves are also life insurance reserves as defined by section 816(b). 
If the reserves are not life insurance reserves, section 807(c)(3) 
provides that reserves for obligations under insurance and annuity 
contracts not involving life, accident, or health contingencies are 
computed using an appropriate rate of interest. The appropriate rate of 
interest is the highest (as of the time the obligation first did not 
involve life, accident, or health contingencies) of the following 
rates: (1) The applicable Federal interest rate (as defined in section 
807(d)(2)(B)(i)); (2) the prevailing State assumed interest rate (as 
defined in section 807(d)(2)(B)(ii)); or (3) the rate of interest 
assumed by the insurance company to determine the contract's guaranteed 
benefit. Section 807(c) also provides that the reserves computed under 
section 807(c)(3) are never less than the net surrender value of the 
contract.
    For a modified guaranteed contract that does give rise to life 
insurance reserves, as defined in section 816(b), reserves are computed 
under section 807(d). Under section 807(d)(1), the life insurance 
reserves for a contract cannot exceed the statutory reserves for the 
contract. Subject to that cap, a contract's life insurance reserves 
equal the greater of: (1) The contract's net surrender value; or (2) 
the contract's Federally prescribed reserve determined under section 
807(d)(2).
    Section 807(d)(2) provides that the Federally prescribed reserves 
for a contract are determined using: (1) The tax reserve method 
applicable to the contract; (2) the greater of the applicable Federal 
interest rate or the prevailing State assumed interest rate in effect 
on the date of the issuance of the contract; and (3) the prevailing 
commissioners' standard tables for mortality and morbidity. In the case 
of a life insurance contract covered by the Commissioners' Reserve 
Valuation Method (CRVM) or an annuity contract covered by the 
Commissioners' Annuities Reserve Valuation Method (CARVM), section 
807(d)(3) provides that the tax reserve method applicable to a contract 
is the CRVM or CARVM prescribed by the National Association of 
Insurance Commissioners (NAIC), which is in effect on the date of the 
issuance of the contract.
    Section 811(d) imposes an additional reserve computation rule for 
contracts that guarantee beyond the end of the

[[Page 38216]]

taxable year payment or crediting of amounts in the nature of interest 
in excess of the greater of the prevailing state assumed interest rate 
or the applicable Federal interest rate. In those circumstances, 
section 811(d) requires that the contract's future guaranteed benefits 
be determined as though the interest in excess of the greater of the 
prevailing state assumed interest rate or the applicable Federal rate 
were guaranteed only to the end of the taxable year.

Required Interest

    Section 812(b) defines the company's share of net investment income 
for the taxable year the computation of which also requires use of an 
interest rate. The company's share equals the excess, if any, of the 
net investment income over the sum of the policy interest (as defined 
in section 812(b)(2)) and the gross investment income's proportionate 
share of policyholder dividends (as defined in section 812(b)(3)) for 
the taxable year. Policy interest includes required interest on 
reserves under section 807(c) (other than section 807(c)(2) reserves), 
determined under section 812(b)(2)(A) by using the greater of the 
prevailing State assumed rate or the applicable Federal interest rate. 
If neither the prevailing State assumed interest rate nor the 
applicable Federal interest rate is used, another appropriate rate is 
used to calculate required interest.

Legislation Affecting Modified Guaranteed Contracts

    The interest rates used for both reserves and required interest for 
modified guaranteed contracts are governed by section 817A. Under 
section 817A(e)(2), the IRS is authorized to determine annually the 
applicable interest rate to be used under sections 807(c)(3), 
807(d)(2)(B) and 812 for a modified guaranteed contract. The IRS is 
authorized to exercise this authority by issuing a periodic 
announcement of the appropriate market interest rates or formula for 
determining such rates. H.R. Conf. Rept. No. 737, 104th Cong. 2d Sess. 
313 (1996). Section 817A(e) also authorizes the IRS to modify or waive 
the application of section 811(d) (relating to interest guaranteed 
beyond the end of the taxable year), and to prescribe other regulations 
that are necessary or appropriate to carry out the purposes of section 
817A.
    The legislative history of section 817A indicates that an 
appropriate interest rate is a current market rate. H.R. Conf. Rep. No. 
737, at 313. The interest rate may be determined, for example, using 
either a rate that is appropriate for the obligations under the 
contract to which the reserve relates or the yield on the assets 
underlying the modified guaranteed contract. In light of this 
legislative history and the purpose of section 817A, the statutory 
grant of authority to prescribe regulations to specify the appropriate 
interest rate is broad, granting discretion to the Secretary to 
determine that rate which will best match the obligations under 
modified guaranteed contracts to the market fluctuations of the 
underlying assets.

Explanation of Provisions

    This document contains proposed amendments to 26 CFR part 1 under 
sections 807, 811, 812, and 817A of the Internal Revenue Code (Code). 
These proposed rules specify the appropriate interest rates to be used 
by insurance companies in the determination of tax reserves under 
sections 807(c)(3) and (d)(2)(B), and the company's share of net 
investment income under 812(b)(2)(A), for certain modified guaranteed 
contracts, as defined in section 817A(d). It also describes the manner 
in which section 811(d) governing the calculation of reserves for 
certain insurance contracts is to be applied to these contracts. The 
proposed regulations do not adopt the position set forth in Notice 97-
32, and instead provide that the appropriate interest rate for each 
non-equity-indexed modified guaranteed contract is the current market 
rate. These proposed regulations define the current market rate as the 
Treasury constant maturity interest rate published by the Board of 
Governors of the Federal Reserve System. The Treasury constant maturity 
interest rates are released each Monday as part of statistical release 
H.15, Selected Interest Rates, and can also be found at http://www.federalreserve.gov/releases/#weekly. Availability of the release is 
announced on (202) 452-3206. The proposed regulations do not take a 
position as to the appropriate interest rate to be used for an equity-
indexed modified guaranteed contract whose market value adjustment is 
based on the performance of stocks, other equity instruments or equity-
based derivatives.
    The proposed regulations under section 817A, relating to the 
definition of the appropriate interest rate to be used in determining 
tax reserves under sections 807(c)(3) and (d)(2), the appropriate 
interest rate to be used under section 811(d), and required interest 
under 812(b)(2)(A), will be effective on the date that the regulations 
become final. However, pursuant to section 7805(b)(7), taxpayers will 
be permitted to apply the final regulations retroactively for all tax 
years beginning after December 31, 1995, the effective date of section 
817A.

Effect on Other Documents

    Notice 97-32 will not be revoked or superseded until final 
regulations are published in the Federal Register.

Special Analyses

    It has been determined that this notice of proposed rulemaking is 
not a significant regulatory action as defined in Executive Order 
12866. Therefore, a regulatory assessment is not required. It also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to these regulations, and because 
the regulations do not impose a collection of information on small 
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not 
apply. Pursuant to section 7805(f) of the Internal Revenue Code, the 
notice of proposed rulemaking will be submitted to the Chief Counsel 
for Advocacy of the Small Business Administration for comment on their 
impact on small business.

Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, 
consideration will be given to any written (preferably a signed 
original and eight copies) or electronic comments that are timely 
submitted to the IRS. The IRS and Treasury specifically request 
comments on the clarity of the proposed regulations and how they can be 
made easier to understand. All comments will be available for public 
inspection and copying.
    Comments are specifically requested on the use of a different 
current market rate for non-equity-indexed modified guaranteed 
contracts than the rate specified in these proposed regulations. 
Comments are also requested concerning the appropriate interest rate to 
use for equity-indexed modified guaranteed contracts. Any comments on 
these topics should address not only the definitions of such rates, but 
whether such approaches are presently in use among taxpayers, why such 
rates would produce superior measures of reserves and net income than 
the current market rate proposed in these regulations, and whether the 
use of such rates would produce simpler and less costly compliance 
burdens than the current market rate proposed in these regulations.
    With regard to any comments submitted regarding non-equity-indexed 
modified guaranteed contracts that suggest the use of a insurer's 
contract crediting rate offered for newly issued

[[Page 38217]]

contracts with temporary guarantee periods equal in duration to the 
remaining duration of the temporary guarantee period of the original 
contract, several additional questions should be addressed. In the 
event the insurer does not offer modified guaranteed contracts with an 
identical temporary guarantee period as the temporary guarantee period 
remaining for the original contract, what rule should be used? If an 
interpolation of other rates should be used, what rule should be used? 
In the event interpolation is not meaningful because (1) The duration 
periods of the modified guaranteed contracts being newly issued are too 
dissimilar from the contract's remaining duration, (2) there are not 
enough newly issued modified guaranteed contracts to make a reasonable 
interpolation, or (3) the insurer has ceased issuing modified 
guaranteed contracts, what rule should be used? For example, should the 
federal rate defined in section 1272(d) applicable for the number of 
years remaining in the temporary guarantee period of the contract be 
used?
    Comments may also be submitted requesting that section 811(d) be 
modified or waived regarding modified guarantee contracts. The 
requested waiver or modification should include details on the 
implementation of any proposed rules.
    Finally, if the application of the regulation for earlier tax 
years, once made final, requires clarification or amplification, 
affected taxpayers should detail their concerns and proposed solutions. 
All comments will be available for public inspection and copying in 
their entirety.
    A public hearing has been scheduled for August 27, 2002, at 10 
a.m., in Room 4718 in the Internal Revenue Building, 1111 Constitution 
Avenue, NW, Washington, DC. Because of access restrictions, visitors 
must enter at the main entrance, located at 1111 Constitution Avenue, 
NW. All visitors must present photo identification to enter the 
building and visitors will not be admitted beyond the immediate 
entrance area more than 30 minutes before the hearing starts. For 
information about having your name placed on the building access list 
to attend the hearing, see the FOR FURTHER INFORMATION CONTACT portion 
of this preamble.
    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who 
wish to present oral comments at the nearing must submit written or 
electronic comments, an outline of the topics to be discussed, and the 
time to be devoted to each topic (preferably a signed original and 
eight (8) copies) by August 6, 2002. A period of 10 minutes will be 
allotted to each person for making comments. An agenda showing the 
scheduling of the speakers will be prepared after the deadline for 
receiving outlines has passed. Copies of the agenda will be available 
free of charge at the hearing.

Drafting Information

    The principal author of these proposed regulations is Ann H. Logan, 
Office of the Associate Chief Counsel (Financial Institutions and 
Products), Office of Chief Counsel, Internal Revenue Service. However, 
personnel from other offices of the IRS and the Treasury Department 
participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

PART 1--INCOME TAX; TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1953

    1. The authority citation for part 1 is amended by adding entries 
in numerical order to read as follows:

    Authority: 26 U.S.C. 7805 * * *

Section 1.807-2 also issued under 26 U.S.C. 817A(e) * * *
Section 1.811-3 also issued under 26 U.S.C. 817A(e) * * *
Section 1.812-9 also issued under 26 U.S.C. 817A(e) * * *
Section 1.817A-1 also issued under 26 U.S.C. 817A(e) * * *

    2. Section 1.807-2 is added to read as follows:


[sect] 1.807-2  Cross-Reference.

    For special rules regarding the treatment of modified guaranteed 
contracts (as defined in section 817A and [sect] 1.817A-1(a)(1)), see 
[sect] 1.817A-1.
    3. Section 1.811-3 is added to read as follows:


[sect] 1.811-3  Cross-Reference.

    For special rules regarding the treatment of modified guaranteed 
contracts (as defined in section 817A and [sect] 1.817A-1(a)(1)), see 
[sect] 1.817A-1.
    4. Section 1.812-9 is added to read as follows:


[sect] 1.812-9  Cross-Reference.

    For special rules regarding the treatment of modified guaranteed 
contracts (as defined in section 817A and [sect] 1.817A-1(a)(1)), see 
[sect] 1.817A-1.
    5. Sections 1.817A-0 and 1.817A-1 are added to read as follows:


[sect] 1.817A-0  Table of contents.

    This section lists the captions that appear in section 1.817A-1:

[sect] 1.817A-1 Certain modified guaranteed contracts.

    (a) Definitions.
    (1) Modified guaranteed contract.
    (2) Temporary guarantee period.
    (3) Equity-indexed modified guaranteed contract.
    (4) Non-equity-indexed modified guaranteed contract.
    (5) Current market rate for non-equity-indexed modified 
guaranteed contract.
    (6) Current market rate for equity-indexed modified guaranteed 
contract. [Reserved.]
    (b) Applicable interest rates for non-equity-indexed modified 
guaranteed contracts.
    (1) Tax reserves during temporary guarantee period.
    (2) Required interest during temporary guarantee period.
    (3) Application of section 811(d).
    (4) Periods after the end of the temporary guarantee period.
    (5) Examples.
    (c) Applicable interest rates for equity-indexed modified 
guaranteed contracts. [Reserved.]
    (d) Effective date.


[sect] 1.817A-1  Certain modified guaranteed contracts.

    (a) Definitions--(1) Modified guaranteed contract. The term 
modified guaranteed contract (MGC) is defined in section 817A(d) as an 
annuity, life insurance, or pension plan contract (other than a 
variable contract described in section 817) under which all or part of 
the amounts received under the contract are allocated to a segregated 
account. Assets and reserves in this segregated account must be valued 
from time to time with reference to market values for annual statement 
purposes. Further, an MGC must provide either for a net surrender value 
or for a policyholder's fund (as defined in section 807(e)(1)). If only 
a portion of a contract is not described in section 817, such portion 
is treated as a separate contract for purposes of applying section 
817A.
    (2) Temporary guarantee period. An MGC may temporarily guarantee a 
return other than the permanently guaranteed crediting rate for a 
period specified in the contract (the temporary guarantee period). 
During the temporary guarantee period, the amount paid to the 
policyholder upon surrender is usually increased or decreased by a 
market value adjustment, which is determined by a formula set forth 
under the terms of the MGC.
    (3) Equity-indexed modified guaranteed contract. An equity-indexed 
MGC is an MGC, as defined in paragraph (a)(1) of this section, that 
provides a return during or at the end

[[Page 38218]]

of the temporary guarantee period based on the performance of stocks, 
other equity instruments, or equity-based derivatives.
    (4) Non-equity-indexed modified guaranteed contract. A non-equity-
indexed MGC is an MGC, as defined in paragraph (a)(1) of this section, 
that provides a return during or at the end of the temporary guarantee 
period not based on the performance of stocks, other equity 
instruments, or equity-based derivatives.
    (5) Current market rate for non-equity-indexed modified guaranteed 
contracts. The current market rate for a non-equity-indexed MGC issued 
by an insurer (whether issued in that tax year or a previous one) is 
the appropriate Treasury constant maturity interest rate published by 
the Board of Governors of the Federal Reserve System for the month 
containing the last day of the insurer's taxable year. The appropriate 
rate is that rate published for Treasury securities with the shortest 
published maturity that is greater than (or equal to) the remaining 
duration of the current temporary guarantee period under the MGC.
    (6) Current market rate for equity-indexed modified guaranteed 
contracts. [Reserved]
    (b) Applicable interest rates for non-equity-indexed modified 
guaranteed contracts--(1) Tax reserves during temporary guarantee 
period. An insurance company is required to determine the tax reserves 
for an MGC under sections 807(c)(3) or (d)(2). During a non-equity-
indexed MGC's temporary guarantee period, the applicable interest rate 
to be used under sections 807(c)(3) and (d)(2)(B) is the current market 
rate, as defined in paragraph (a)(5) of this section.
    (2) Required interest during temporary guarantee period. During the 
temporary guarantee period of a non-equity-indexed MGC, the applicable 
interest rate to be used to determine required interest under section 
812(b)(2)(A) is the same current market rate, defined in paragraph 
(a)(5) of this section, that applies for that period for purposes of 
sections 807(c)(3) or (d)(2)(B).
    (3) Application of section 811(d). An additional reserve 
computation rule applies under section 811(d) for contracts that 
guarantee certain interest payments beyond the end of the taxable year. 
Section 811(d) is not modified or waived for the taxable year in which 
a non-equity-indexed MGC is issued. The current market rate, as defined 
in paragraph (a)(5) of this section, is to be applied to the remaining 
years of the MGC's temporary guarantee period.
    (4) Periods after the end of the temporary guarantee period. For 
periods after the end of the temporary guarantee period, sections 
807(c)(3), 807(d)(2)(B), 811(d) and 812(b)(2)(A) are not modified when 
applied to non-equity-indexed MGCs. None of these sections are affected 
by the definition of current market rate contained in paragraph (a)(5) 
of this section once the temporary guarantee period has expired.
    (5) Examples. The following examples illustrate this paragraph (b):

    Example 1. (i) IC, a life insurance company as defined in 
section 816, issues a MGC (the Contract) on August 1 of 1996. Assume 
that the conditions invoking the application of section 811(d) are 
not present. The Contract is an annuity contract that gives rise to 
life insurance reserves, as defined in section 816(b). IC is a 
calendar year taxpayer. The Contract guarantees that interest will 
be credited at 8 percent per year for the first 8 contract years and 
4 percent per year thereafter. During the 8-year temporary guarantee 
period, the Contract provides for a market value adjustment based on 
changes in a published bond index and not on the performance of 
stocks, other equity instruments or equity based derivatives. IC has 
chosen to avail itself of the provisions of these regulations for 
1996 and taxable years thereafter. The 10-year Treasury constant 
maturity interest rate published for December of 1996 was 6.30 
percent. The next shortest maturity published for Treasury constant 
maturity interest rates is 7 years. As of the end of 1996, the 
remaining duration of the temporary guarantee period for the 
Contract was 7 years and 7 months.
    (ii) To determine under section 807(d)(2) the end of 1996 
reserves for the Contract, IC must use a discount interest rate of 
6.30 percent for the temporary guarantee period. The interest rate 
to be used in computing required interest under section 812(b)(2)(A) 
for 1996 reserves is also 6.30 percent.
    (iii) The discount rate applicable to periods outside the 8-year 
temporary guarantee period is determined under sections 807(c)(3), 
807(d)(2)(B), 811(d) and 812(b)(2)(A) without regard to the current 
market rate.
    Example 2. Assume the same facts as in Example 1 except that it 
is now the last day of 1998. The remaining duration of the temporary 
guarantee period under the Contract is now 5 years and 7 months. The 
7-year Treasury constant maturity interest rate published for 
December of 1998 was 4.65 percent. The next shortest duration 
published for Treasury constant maturity interest rates is 5 years. 
A discount rate of 4.65 percent is used for the remaining duration 
of the temporary guarantee period for the purpose of determining a 
reserve under section 807(d) and for the purpose of determining 
required interest under section 812(b)(2)(A).
    Example 3. Assume the same facts as in Example 1 except that it 
is now the last day of 2001. The remaining duration of the temporary 
guarantee period under the Contract is now 2 years and 7 months. The 
3-year Treasury constant maturity interest rate published for 
December of 2001 was 3.62 percent. The next shortest duration 
published for Treasury constant maturity interest rates is 2 years. 
A discount rate of 3.62 percent is used for the remaining duration 
of the temporary guarantee period for the purpose of determining a 
reserve under section 807(d) and for the purpose of determining 
required interest under section 812(b)(2)(A).

    (c) Applicable interest rates for equity-indexed modified 
guaranteed contracts. [Reserved.]
    (d) Effective date. Paragraphs (a), (b) and (d) of this proposed 
regulation are effective on the date this notice is filed as a final 
regulation in the Federal Register. However, pursuant to section 
7805(b)(7), taxpayers may elect to apply the final regulations 
retroactively for all taxable years beginning after December 31, 1995, 
the effective date of section 817A.

Robert E. Wenzel,
Deputy Commissioner of Internal Revenue.
[FR Doc. 02-13848 Filed 5-31-02; 8:45 am]
BILLING CODE 4830-01-P