I 

108TH CONGRESS 

1ST SESSION H. R. 2228

To amend the Internal Revenue Code of 1986 to permit the consolidation 

of life insurance companies with other companies. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2003

Mr. CRANE (for himself, Mr. MATSUI, Mr. SHAW, Mr. RANGEL, Mrs. JOHNSON of Connecticut, Mr. HOUGHTON, Mr. HERGER, Mr. RAMSTAD, Mr. 

SAM JOHNSON of Texas, Mr. COLLINS, Mr. PORTMAN, Mr. ENGLISH, Mr. 

HULSHOF, Mr. MCINNIS, Mr. LEWIS of Kentucky, Mr. FOLEY, Mr. 

BRADY of Texas, Mr. MCNULTY, Mr. BECERRA, and Mr. POMEROY) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL

To amend the Internal Revenue Code of 1986 to permit 

the consolidation of life insurance companies with other 

companies.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. CONSOLIDATION OF LIFE INSURANCE COMPA4 NIES WITH OTHER COMPANIES PERMITTED. 

5 (a) IN GENERAL.—Section 1504(b) of the Internal 

6 Revenue Code of 1986 (defining includible corporation) is 

7 amended by striking paragraph (2) and by redesignating 
2

•HR 2228 IH 

1 paragraphs (3) through (8) as paragraphs (2) through 

2 (7), respectively. 

3 (b) CONFORMING AMENDMENTS.—

4 (1) Section 1503 of such Code is amended by 

5 striking subsection (c) (relating to special rule for 

6 application of certain losses against income of insur7 ance companies taxed under section 801) and by re8 designating subsections (d), (e), and (f) as sub9 sections (b), (c), and (d), respectively. 

10 (2) Section 1504 of such Code is amended by 

11 striking subsection (c) and by redesignating sub12 sections (d), (e), and (f) as subsections (c), (d), and 

13 (e), respectively. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2003. 

17 (d) PHASEIN OF APPLICATION OF CERTAIN LOSSES

18 AGAINST INCOME OF INSURANCE COMPANIES.—For tax19 able years beginning after December 31, 2003, and before 

20 January 1, 2010—

21 (1) IN GENERAL.—If—

22 (A) an affiliated group includes 1 or more 

23 domestic insurance companies each of which is 

24 subject to tax under section 801 of the Internal 

25 Revenue Code of 1986, 
3

•HR 2228 IH 

1 (B) the common parent of such group has 

2 not elected under subsection (e) to treat all 

3 such insurance companies as corporations which 

4 are not includible corporations, and 

5 (C) the consolidated taxable income of the 

6 members of the group not taxed under such 

7 section 801 results in a consolidated net oper8 ating loss for such taxable year, 

9 then, under regulations prescribed by the Secretary 

10 of the Treasury or his delegate, the amount of such 

11 loss which cannot be absorbed in the applicable 

12 carryback periods against the taxable income of such 

13 members not taxed under such section 801 shall be 

14 taken into account in determining the consolidated 

15 taxable income of the affiliated group for such tax16 able year to the extent of the applicable percentage 

17 of such loss or the applicable percentage of the tax18 able income of the members taxed under such sec19 tion 801, whichever is less. The unused portion of 

20 such loss shall be available as a carryover, subject to 

21 the same limitations (applicable to the sum of the 

22 loss for the carryover year and the loss (or losses) 

23 carried over to such year), in applicable carryover 

24 years. 
4

•HR 2228 IH 

1 (2) APPLICABLE PERCENTAGE.—For purposes 

2 of paragraph (1), the applicable percentage shall be 

3 determined in accordance with the following table:

The applicable 

For taxable years beginning in: percentage is: 

2004 ................................................................................................... 40

2005 ................................................................................................... 50

2006 ................................................................................................... 60

2007 ................................................................................................... 70

2008 ................................................................................................... 80

2009 ................................................................................................... 90.

4 (e) ELECTION FOR PRE-2010 YEARS OF GROUPS

5 WITH INSURANCE COMPANIES.—For taxable years begin6 ning after December 31, 2003, and before January 1, 

7 2010, the common parent of an affiliated group (deter8 mined without regard to section 1504(b)(2) of such Code 

9 as in effect on the day before the date of enactment of 

10 this Act) which includes 1 or more domestic insurance 

11 companies subject to tax under section 801 of such Code 

12 may elect to treat all such insurance companies as cor13 porations which are not includible corporations within the 

14 meaning of subsection (b) of section 1504 of such Code, 

15 if, as of the date of enactment of this section—

16 (1) such affiliated group included 1 or more in17 surance companies subject to tax under section 801 

18 of such Code, and 

19 (2) no additional election was in effect under 

20 section 1504(c)(2) of such Code (as in effect on the 

21 day before the date of the enactment of this Act). 
5

•HR 2228 IH 

1 (f) NO CARRYBACK BEFORE JANUARY 1, 2004.—To 

2 the extent that a consolidated net operating loss is allowed 

3 or increased by reason of the amendments made by this 

4 section, such loss may not be carried back to a taxable 

5 year beginning before January 1, 2004. 

6 (g) NONTERMINATION OF GROUP.—No affiliated 

7 group shall terminate solely as a result of the amendments 

8 made by this section. 

9 (h) SUBSIDIARY STOCK BASIS ADJUSTMENTS.—A 

10 member corporation’s basis in the stock of a subsidiary 

11 corporation shall be adjusted upon consolidation to reflect 

12 the preconsolidation income, gain, deduction, loss distribu13 tions and other relevant amounts during a period when 

14 such corporations were members of an affiliated group 

15 (determined without regard to section 1504(b)(2) of such 

16 Code as in effect on the day before the date of enactment 

17 of this Act) but were not included in a consolidated return 

18 of such group by operation of section 1504(c)(2)(A) of 

19 such Code (as in effect on the day before the date of the 

20 enactment of this Act) or by reason of the election allowed 

21 under subsection (e) of this Act. 

22 (i) WAIVER OF 5-YEAR WAITING PERIOD.—An auto23 matic waiver from the 5-year waiting period for reconsoli24 dation provided in section 1504(a)(3) of such Code shall 

25 be granted to any corporation which was previously an in-
6

•HR 2228 IH 

1 cludible corporation but was subsequently deemed a non2 includible corporation as a result of becoming a subsidiary 

3 of a corporation which was not an includible corporation 

4 solely by operation of section 1504(c)(2) of such Code (as 

5 in effect on the day before the date of enactment of this 

6 Act), subject to such conditions as the Secretary may pre7 scribe.

Æ