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26 U.S.C. § 848 — Capitalization of certain policy acquisition expenses
Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** In the case of an insurance company—
(1) specified policy acquisition expenses for any taxable year shall be capitalized, and
(2) such expenses shall be allowed as a deduction ratably over the 180-month period beginning with the first month in the second half of such taxable year.
**(b) 5-year amortization for first $5,000,000 of specified policy acquisition expenses**
(1) **In general** — Paragraph (2) of subsection (a) shall be applied with respect to so much of the specified policy acquisition expenses of an insurance company for any taxable year as does not exceed $5,000,000 by substituting “60-month” for “180-month”.
(2) **Phase-out** — If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any taxable year, the $5,000,000 amount under paragraph (1) shall be reduced (but not below zero) by the amount of such excess.
(3) **Special rule for members of controlled group** — In the case of any controlled group—
(A) all insurance companies which are members of such group shall be treated as 1 company for purposes of this subsection, and
(B) the amount to which paragraph (1) applies shall be allocated among such companies in such manner as the Secretary may prescribe.
For purposes of the preceding sentence, the term “controlled group” means any controlled group of corporations as defined in section 1563(a); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and subsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.
(4) **Exception for acquisition expenses attributable to certain reinsurance contracts** — Paragraph (1) shall not apply to any specified policy acquisition expenses for any taxable year
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Source file: Laws/federal/codes/united-states-code/title-26/section-848-capitalization-of-certain-policy-acquisition-expenses--c00f91db79.md
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Source location: Title 26, Chapter 1, § 848; chapter-001-normal-taxes-and-surtaxes.md
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**(a) General rule** In the case of an insurance company—
(1) specified policy acquisition expenses for any taxable year shall be capitalized, and
(2) such expenses shall be allowed as a deduction ratably over the 180-month period beginning with the first month in the second half of such taxable year.
**(b) 5-year amortization for first $5,000,000 of specified policy acquisition expenses**
(1) **In general** — Paragraph (2) of subsection (a) shall be applied with respect to so much of the specified policy acquisition expenses of an insurance company for any taxable year as does not exceed $5,000,000 by substituting “60-month” for “180-month”.
(2) **Phase-out** — If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any taxable year, the $5,000,000 amount under paragraph (1) shall be reduced (but not below zero) by the amount of such excess.
(3) **Special rule for members of controlled group** — In the case of any controlled group—
(A) all insurance companies which are members of such group shall be treated as 1 company for purposes of this subsection, and
(B) the amount to which paragraph (1) applies shall be allocated among such companies in such manner as the Secretary may prescribe.
For purposes of the preceding sentence, the term “controlled group” means any controlled group of corporations as defined in section 1563(a); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and subsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.
(4) **Exception for acquisition expenses attributable to certain reinsurance contracts** — Paragraph (1) shall not apply to any specified policy acquisition expenses for any taxable year which are attributable to premiums or other consideration under any reinsurance contract.
**(c) Specified policy acquisition expenses** For purposes of this section—
(1) **In general** — The term “specified policy acquisition expenses” means, with respect to any taxable year, so much of the general deductions for such taxable year as does not exceed the sum of—
(A) 2.09 percent of the net premiums for such taxable year on specified insurance contracts which are annuity contracts,
(B) 2.45 percent of the net premiums for such taxable year on specified insurance contracts which are group life insurance contracts, and
(C) 9.2 percent of the net premiums for such taxable year on specified insurance contracts not described in subparagraph (A) or (B).
(2) **General deductions** — The term “general deductions” means the deductions provided in part VI of subchapter B (sec. 161 and following, relating to itemized deductions) and in part I of subchapter D (sec. 401 and following, relating to pension, profit sharing, stock bonus plans, etc.).
**(d) Net premiums** For purposes of this section—
(1) **In general** — The term “net premiums” means, with respect to any category of specified insurance contracts set forth in subsection (c)(1), the excess (if any) of—
(A) the gross amount of premiums and other consideration on such contracts, over
(B) return premiums on such contracts and premiums and other consideration incurred for reinsurance of such contracts.
The rules of section 803(b) shall apply for purposes of the preceding sentence.
(2) **Amounts determined on accrual basis** — In the case of an insurance company subject to tax under part II of this subchapter, all computations entering into determinations of net premiums for any taxable year shall be made in the manner required under section 811(a) for life insurance companies.
(3) **Treatment of certain policyholder dividends and similar amounts** — Net premiums shall be determined without regard to section 808(e) and without regard to other similar amounts treated as paid to, and returned by, the policyholder.
(4) **Special rules for reinsurance**
(A) Premiums and other consideration incurred for reinsurance shall be taken into account under paragraph (1)(B) only to the extent such premiums and other consideration are includible in the gross income of an insurance company taxable under this subchapter or are subject to tax under this chapter by reason of subpart F of part III of subchapter N.
(B) The Secretary shall prescribe such regulations as may be necessary to ensure that premiums and other consideration with respect to reinsurance are treated consistently by the ceding company and the reinsurer.
**(e) Classification of contracts** For purposes of this section—
(1) **Specified insurance contract**
(A) *In general* — Except as otherwise provided in this paragraph, the term “specified insurance contract” means any life insurance, annuity, or noncancellable accident and health insurance contract (or any combination thereof).
(B) *Exceptions* — The term “specified insurance contract” shall not include—
(i) any pension plan contract (as defined in section 818(a)),
(ii) any flight insurance or similar contract,
(iii) any qualified foreign contract (as defined in section 807(e)(3) without regard to paragraph (5) of this subsection),
(iv) any contract which is an Archer MSA (as defined in section 220(d)), and
(v) any contract which is a health savings account (as defined in section 223(d)).
(2) **Group life insurance contract** — The term “group life insurance contract” means any life insurance contract—
(A) which covers a group of individuals defined by reference to employment relationship, membership in an organization, or similar factor,
(B) the premiums for which are determined on a group basis, and
(C) the proceeds of which are payable to (or for the benefit of) persons other than the employer of the insured, an organization to which the insured belongs, or other similar person.
(3) **Treatment of annuity contracts combined with noncancellable accident and health insurance** — Any annuity contract combined with noncancellable accident and health insurance shall be treated as a noncancellable accident and health insurance contract and not as an annuity contract.
(4) **Treatment of guaranteed renewable contracts** — The rules of section 816(e) shall apply for purposes of this section.
(5) **Treatment of reinsurance contract** — A contract which reinsures another contract shall be treated in the same manner as the reinsured contract.
(6) **Treatment of certain qualified long-term care insurance contract arrangements** — An annuity or life insurance contract which includes a qualified long-term care insurance contract as a part of or a rider on such annuity or life insurance contract shall be treated as a specified insurance contract not described in subparagraph (A) or (B) of subsection (c)(1).
**(f) Special rule where negative net premiums**
(1) **In general** — If for any taxable year there is a negative capitalization amount with respect to any category of specified insurance contracts set forth in subsection (c)(1)—
(A) the amount otherwise required to be capitalized under this section for such taxable year with respect to any other category of specified insurance contracts shall be reduced (but not below zero) by such negative capitalization amount, and
(B) such negative capitalization amount (to the extent not taken into account under subparagraph (A))—
(i) shall reduce (but not below zero) the unamortized balance (as of the beginning of such taxable year) of the amounts previously capitalized under subsection (a) (beginning with the amount capitalized for the most recent taxable year), and
(ii) to the extent taken into account as such a reduction, shall be allowed as a deduction for such taxable year.
(2) **Negative capitalization amount** — For purposes of paragraph (1), the term “negative capitalization amount” means, with respect to any category of specified insurance contracts, the percentage (applicable under subsection (c)(1) to such category) of the amount (if any) by which—
(A) the amount determined under subparagraph (B) of subsection (d)(1) with respect to such category, exceeds
(B) the amount determined under subparagraph (A) of subsection (d)(1) with respect to such category.
**(g) Treatment of certain ceding commissions** Nothing in any provision of law (other than this section or section 197) shall require the capitalization of any ceding commission incurred on or after September 30, 1990, under any contract which reinsures a specified insurance contract.
**(h) Secretarial authority to adjust capitalization amounts**
(1) **In general** — Except as provided in paragraph (2), the Secretary may provide that a type of insurance contract will be treated as a separate category for purposes of this section (and prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition expenses for such type of contract which would otherwise result under this section is substantially greater than the deferral of acquisition expenses which would have resulted if actual acquisition expenses (including indirect expenses) and the actual useful life for such type of contract had been used.
(2) **Adjustment to other contracts** — If the Secretary exercises his authority with respect to any type of contract under paragraph (1), the Secretary shall adjust the percentage which would otherwise have applied under subsection (c)(1) to the category which includes such type of contract so that the exercise of such authority does not result in a decrease in the amount of revenue received under this chapter by reason of this section for any fiscal year.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** For purposes of this subtitle, the term “adjusted gross income” means, in the case of an individual, gross income minus the following deductions:
(1) **Trade and business deductions** — The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee.
(2) **Certain trade and business deductions of employees**
(A) *Reimbursed expenses of employees* — The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies.
(B) *Certain expenses of performing artists* — The deductions allowed by section 162 which consist of expenses paid or incurred by a qualified performing artist in connection with the performances by him of services in the performing arts as an employee.
(C) *Certain expenses of officials* — The deductions allowed by section 162 which consist of expenses paid or incurred with respect to services performed by an official as an employee of a State or a political subdivision thereof in a position compensated in whole or in part on a fee basis.
(D) *Certain expenses of elementary and secondary school teachers* — The deductions allowed by section 162 which consist of expenses, not in excess of $250, paid or incurred by an eligible educator—
(i) by reason of the participation of the educator
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 62
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rules for annuities**
(1) **Income inclusion** — Except as otherwise provided in this chapter, gross income includes any amount received as an annuity (whether for a period certain or during one or more lives) under an annuity, endowment, or life insurance contract.
(2) **Partial annuitization** — If any amount is received as an annuity for a period of 10 years or more or during one or more lives under any portion of an annuity, endowment, or life insurance contract—
(A) such portion shall be treated as a separate contract for purposes of this section,
(B) for purposes of applying subsections (b), (c), and (e), the investment in the contract shall be allocated pro rata between each portion of the contract from which amounts are received as an annuity and the portion of the contract from which amounts are not received as an annuity, and
(C) a separate annuity starting date under subsection (c)(4) shall be determined with respect to each portion of the contract from which amounts are received as an annuity.
**(b) Exclusion ratio**
(1) **In general** — Gross income does not include that part of any amount received as an annuity under an annuity, endowment, or life insurance contract which bears the same ratio to such amount as the investment in the contract (as of the annuity starting date) bears to the expected return under the contract (as of such date).
(2) **Exclusion limited to investment** — The portion of any amount received as an annuity which is excluded from gross income under paragraph (1) shall not exceed the unrecovered investment in the contract immediately before the receipt of such amount.
(3) **Deduction where annuity payments cease before entire investment recovered**
(A) *In general* — If—
(i) after the annuity starti
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 72
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Corporations in general** A tax is hereby imposed for each taxable year on the taxable income of every corporation.
**(b) Amount of tax** The amount of the tax imposed by subsection (a) shall be 21 percent of taxable income.
**(c) Exceptions** Subsection (a) shall not apply to a corporation subject to a tax imposed by—
(1) section 594 (relating to mutual savings banks conducting life insurance business),
(2) subchapter L (sec. 801 and following, relating to insurance companies), or
(3) subchapter M (sec. 851 and following, relating to regulated investment companies and real estate investment trusts).
**(d) Foreign corporations** In the case of a foreign corporation, the taxes imposed by subsection (a) and section 55 shall apply only as provided by section 882.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 11
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Decrease treated as gross income** If for any taxable year—
(1) the opening balance for the items described in subsection (c), exceeds
(2)
(A) the closing balance for such items, reduced by
(B) the amount of the policyholders’ share of tax-exempt interest and the amount of the policyholder’s share of the increase for the taxable year in policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies,
such excess shall be included in gross income under section 803(a)(2).
**(b) Increase treated as deduction** If for any taxable year—
(1)
(A) the closing balance for the items described in subsection (c), reduced by
(B) the amount of the policyholders’ share of tax-exempt interest and the amount of the policyholder’s share of the increase for the taxable year in policy cash values (within the meaning of section 805(a)(4)(F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, exceeds
(2) the opening balance for such items,
such excess shall be taken into account as a deduction under section 805(a)(2).
**(c) Items taken into account** The items referred to in subsections (a) and (b) are as follows:
(1) The life insurance reserves (as defined in section 816(b)).
(2) The unearned premiums and unpaid losses included in total reserves under section 816(c)(2).
(3) The amounts (discounted at the appropriate rate of interest) necessary to satisfy the obligations under insurance and annuity contracts, but only if such obligations do not involve (at the time with respect to which the computation is made under this paragraph) life, accident, or health contingencies.
(4) Dividend accumulations, and other amounts, held at
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 807
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** A taxpayer shall be entitled to an amortization deduction with respect to any amortizable section 197 intangible. The amount of such deduction shall be determined by amortizing the adjusted basis (for purposes of determining gain) of such intangible ratably over the 15-year period beginning with the month in which such intangible was acquired.
**(b) No other depreciation or amortization deduction allowable** Except as provided in subsection (a), no depreciation or amortization deduction shall be allowable with respect to any amortizable section 197 intangible.
**(c) Amortizable section 197 intangible** For purposes of this section—
(1) **In general** — Except as otherwise provided in this section, the term “amortizable section 197 intangible” means any section 197 intangible—
(A) which is acquired by the taxpayer after the date of the enactment of this section, and
(B) which is held in connection with the conduct of a trade or business or an activity described in section 212.
(2) **Exclusion of self-created intangibles, etc.** — The term “amortizable section 197 intangible” shall not include any section 197 intangible—
(A) which is not described in subparagraph (D), (E), or (F) of subsection (d)(1), and
(B) which is created by the taxpayer.
This paragraph shall not apply if the intangible is created in connection with a transaction (or series of related transactions) involving the acquisition of assets constituting a trade or business or substantial portion thereof.
(3) **Anti-churning rules** — For exclusion of intangibles acquired in certain transactions, see subsection (f)(9).
**(d) Section 197 intangible** For purposes of this section—
(1) **In general** — Except as otherwise provided in this section, the term “section 197 i
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Federal law — U.S. Code and appendices · legal_authorities
Page 1948
TITLE 26—INTERNAL REVENUE CODE
[§ 847
unpaid by using the interest rate and loss payment pat-
terns applicable to accident years ending with calendar
year 1987.
‘‘(3) FRESH START.—
‘‘(A) IN GENERAL.—Except as otherwise provided in
this paragraph, any difference between—
‘‘(i) the amount determined to be the unpaid
losses and expenses unpaid for the year preceding
the 1st taxable year of an insurance company begin-
ning after December 31, 1986, determined without
regard to paragraph (2), and
‘‘(ii) such amount determined with regard to
paragraph (2),
shall not be taken into account for purposes of the
Internal Revenue Code of 1986.
‘‘(B) RESERVE STRENGTHENING IN YEARS AFTER 1985.—
Subparagraph (A) shall not apply to any reserve
strengthening in a taxable year beginning in 1986, and
such strengthening shall be treated as occurring in
the taxpayer’s 1st taxable year beginning after De-
cember 31, 1986.
‘‘(C) EFFECT ON EARNINGS AND PROFITS.—The earn-
ings and profits of any insurance company for its 1st
taxable year beginning after December 31, 1986, shall
be increased by the amount of the difference deter-
mined under subparagraph (A) with respect to such
company.
‘‘(4) APPLICATION OF FRESH START TO COMPANIES WHICH
BECOME SUBJECT TO SECTION 831(a) TAX IN LATER TAXABLE
YEAR.—If—
‘‘(A) an insurance company was not subject to tax
under section 831(a) of the Internal Revenue Code of
1986 for its 1st taxable year beginning after December
31, 1986, by reason of being—
‘‘(i) subject to tax under section 831(b) of such
Code, or
‘‘(ii) described in section 501(c) of such Code and
exempt from tax under section 501(a) of such Code,
and
‘‘(B) such company becomes subject to tax under
such section 831(a) for any later taxable year,
paragraph (2)
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 848
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