Sec. 3703. Restriction on insurance business exception to passive foreign investment company rules
353 words·~2 min read·
/bill/113/hr/1/ih/section-3703A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 1297(b)(2)(B) is amended to read as follows: derived in the active conduct of an insurance business by a corporation if— such corporation would be subject to tax under subchapter L if such corporation were a domestic corporation, more than 50 percent of such corporation’s gross receipts for the taxable year consist of premiums, and the applicable insurance liabilities of such corporation constitute more than 35 percent of its total assets as reported on the corporation’s applicable financial statement for the year with which or in which the taxable year ends, .
Section 1297(b) is amended by adding at the end the following new paragraph: For purposes of this subsection— The term applicable insurance liabilities means, with respect to any life or property and casualty insurance business— loss and loss adjustment expenses, unearned premiums, and reserves (other than deficiency or contingency reserves) for life and health insurance risks and life and health insurance claims with respect to contracts providing coverage for mortality or morbidity risks (not to exceed the amount of such reserve that is required to be reported to the home country insurance regulatory body).
The term applicable financial statement means a statement for financial reporting purposes which— is made on the basis of generally accepted accounting principles, is made on the basis of international financial reporting standards, but only if there is no statement that meets the requirement of clause (i), or except as otherwise provided by the Secretary in regulations, is the annual statement which is required to be filed with the home country insurance regulatory body, but only if there is no statement which meets the requirements of clause
(i)or (ii). . Section 1297(b) is amended— by striking the last sentence in paragraph
(2)thereof, and by adding at the end of paragraph
(3)thereof (as added by paragraph (1)), the following new subparagraph: The term related person has the meaning given such term by section 954(d)(3) determined by substituting foreign corporation for controlled foreign corporation each place it appears therein. . The amendment made by this section shall apply to taxable years beginning after December 31, 2014.