I 

109TH CONGRESS 

1ST SESSION H. R. 3019

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

of life insurance companies with other companies. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 21, 2005

Mr. RAMSTAD (for himself, Mrs. JOHNSON of Connecticut, Mr. RANGEL, Mr. 

ENGLISH of Pennsylvania, Mr. HAYWORTH, Mr. REYNOLDS, Mr. 

HULSHOF, Mr. POMEROY, Mrs. JONES of Ohio, and Mr. MCNULTY) 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 
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1 paragraphs (3) through (8) as paragraphs (2) through 

2 (7), respectively. 

3 (b) CONFORMING AMENDMENTS.—

4 (1) Section 1503 of the Internal Revenue Code 

5 of 1986 is amended by striking subsection (c) (relat6 ing to special rule for application of certain losses 

7 against income of insurance companies taxed under 

8 section 801) and by redesignating subsections (d), 

9 (e), and (f) as subsections (c), (d), and (e), respec10 tively. 

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

12 striking subsection (c) and by redesignating sub13 sections (d), (e), and (f) as subsections (c), (d), and 

14 (e), respectively. 

15 (3) Section 243(b)(2)(A) of such Code is 

16 amended by striking ‘‘sections 1504(b)(2), 

17 1504(b)(4), and 1504(c)’’ and inserting ‘‘section 

18 1504(b)(3)’’. 

19 (4) Section 805(a)(4)(E) of such Code is 

20 amended by striking ‘‘1504(b)(3)’’ and inserting 

21 ‘‘1504(b)(2)’’. 

22 (5) Section 818(e)(1) of such Code is amended 

23 to read as follows: 

24 ‘‘(1) ITEMS OF COMPANIES OTHER THAN IN25 SURANCE COMPANIES.—If an affiliated group in-
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1 cludes members which are and which are not taxed 

2 under section 801, all items of the members of such 

3 group which are not taxed under section 801 shall 

4 not be taken into account in determining the amount 

5 of the tentative LICTI of members of such group 

6 which are taxed under section 801.’’. 

7 (6) Section 832(b)(5)(D)(ii)(II) of such Code is 

8 amended by striking ‘‘1504(b)(3)’’ and inserting 

9 ‘‘1504(b)(2)’’. 

10 (7) Section 864(e)(5)(A) of such Code is 

11 amended by striking ‘‘paragraph (4)’’ and inserting 

12 ‘‘paragraph (3)’’. 

13 (8) Section 936(i)(5)(A) of such Code is 

14 amended by striking ‘‘section 1504(b)(3) or (4)’’ 

15 and inserting ‘‘section 1504(b)(2) or (3)’’. 

16 (9) Section 952(c)(1)(B)(vii)(II) of such Code 

17 is amended by striking ‘‘1504(b)(3)’’ and inserting 

18 ‘‘1504(b)(2)’’. 

19 (10) Section 953(d)(3) of such Code is amend20 ed by striking ‘‘1503(d)’’ and inserting ‘‘1503(c)’’. 

21 (11) Section 954(h)(4)(F)(ii) of such Code is 

22 amended by striking ‘‘1504(b)(3)’’ and inserting 

23 ‘‘1504(b)(2)’’. 
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1 (12) Section 6166(b)(10)(B)(ii)(V) of such 

2 Code is amended by striking ‘‘1504(b)(3)’’ and in3 serting ‘‘1504(b)(2)’’. 

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

5 this section shall apply to taxable years beginning after 

6 December 31, 2004. 

7 SEC. 2. PHASE-IN OF APPLICATION OF CERTAIN LOSSES 

8 AGAINST INCOME OF INSURANCE COMPA9 NIES. 

10 (a) PHASE-IN.—

11 (1) IN GENERAL.—For taxable years beginning 

12 after December 31, 2004, and before January 1, 

13 2011, if—

14 (A) an affiliated group includes 1 or more 

15 domestic insurance companies subject to tax 

16 under section 801 of the Internal Revenue Code 

17 of 1986, and 

18 (B) the consolidated taxable income of the 

19 members of the group not taxed under such 

20 section 801 results in a consolidated net oper21 ating loss for such taxable year, 

22 then, under regulations prescribed by the Secretary 

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

24 loss which cannot be absorbed in the applicable 

25 carryback periods against the taxable income of such 
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1 members not taxed under such section 801 shall be 

2 taken into account in determining the consolidated 

3 taxable income of the affiliated group for such tax4 able year to the extent of the applicable percentage 

5 of such loss or the applicable percentage of the tax6 able income of the members taxed under such sec7 tion 801, whichever is less. The unused portion of 

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

9 the same limitations (but determined based on the 

10 applicable percentage with respect to the year to 

11 which carried and applicable to the sum of the loss 

12 for the carryover year and the loss (or losses) car13 ried over to such year), in applicable carryover 

14 years. 

15 (2) APPLICABLE PERCENTAGE.—For purposes 

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

17 determined in accordance with the following table:

For taxable years The applicable 

beginning in: percentage is: 

2005 ................................................................................................... 40

2006 ................................................................................................... 50

2007 ................................................................................................... 60

2008 ................................................................................................... 70

2009 ................................................................................................... 80

2010 ................................................................................................... 90.

18 (b) NO CARRYBACK BEFORE JANUARY 1, 2005.—To 

19 the extent that a consolidated net operating loss is allowed 

20 or increased by reason of this section or the amendments 

21 made by this Act, such loss (or increase in such loss, as 
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1 the case may be) may not be carried back to a taxable 

2 year beginning before January 1, 2005. 

3 (c) NONTERMINATION OF GROUP.—No affiliated 

4 group shall terminate solely as a result of this section or 

5 the amendments made by this Act. 

6 (d) SUBSIDIARY STOCK BASIS ADJUSTMENTS.—A 

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

8 corporation shall be adjusted upon consolidation to reflect 

9 the preconsolidation income, gain, deduction, loss, dis10 tributions, and other relevant amounts during a period 

11 when such corporations were members of an affiliated 

12 group (determined without regard to section 1504(b)(2) 

13 of the Internal Revenue Code of 1986 as in effect on the 

14 day before the date of enactment of this Act) but were 

15 not included in a consolidated return of such group by op16 eration of section 1504(c)(2)(A) of such Code (as in effect 

17 on the day before the date of the enactment of this Act). 

18 (e) WAIVER OF 5-YEAR WAITING PERIOD.—An auto19 matic waiver from the 5-year waiting period for reconsoli20 dation provided in section 1504(a)(3) of the Internal Rev21 enue Code of 1986 shall be granted to any corporation 

22 which was previously an includible corporation but was 

23 subsequently deemed a nonincludible corporation as a re24 sult of becoming a subsidiary of a corporation which was 

25 not an includible corporation solely by operation of section 
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1 1504(c)(2) of such Code (as in effect on the day before 

2 the date of enactment of this Act), subject to such condi3 tions as the Secretary may prescribe.

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