I

107TH CONGRESS

1ST SESSION H. R. 909

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

of life insurance companies with other companies.

IN THE HOUSE OF REPRESENTATIVES

MARCH 7, 2001

Mr. CRANE (for himself, Mr. MATSUI, Mr. ENGLISH, Mr. LEWIS of Georgia,

Mr. BECERRA, Mr. RANGEL, Mr. WELLER, Mr. SAM JOHNSON of Texas,

Mr. COLLINS, Mr. RAMSTAD, Mr. MCNULTY, Mr. HULSHOF, Mr. SHAW,

Mr. NUSSLE, Mrs. JOHNSON of Connecticut, Mr. PORTMAN, Mr.

MCINNIS, Mr. HOUGHTON, Mr. LEWIS of Kentucky, and Mr. HERGER)

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 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, 2000.

17 (d) PHASEIN OF APPLICATION OF CERTAIN LOSSES

18 AGAINST INCOME OF INSURANCE COMPANIES.—For tax19 able years beginning after December 31, 2000, and before

20 January 1, 2007—

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,
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1 (B) the common parent of such group has

2 elected to treat all such companies as includible

3 corporations, and

4 (C) the consolidated taxable income of the

5 members of the group not taxed under such

6 section 801 results in a consolidated net oper7 ating loss for such taxable year,

8 then, under regulations prescribed by the Secretary

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

10 loss which cannot be absorbed in the applicable

11 carryback periods against the taxable income of such

12 members not taxed under such section 801 shall be

13 taken into account in determining the consolidated

14 taxable income of the affiliated group for such tax15 able year to the extent of the applicable percentage

16 of such loss or the applicable percentage of the tax17 able income of the members taxed under such sec18 tion 801, whichever is less. The unused portion of

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

20 the same limitations (applicable to the sum of the

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

22 carried over to such year), in applicable carryover

23 years.
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1 (2) APPLICABLE PERCENTAGE.—For purposes

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

3 determined in accordance with the following table:

For taxable years beginning

in:

The applicable percentage is:

2001 ................................................................................................... 40

2002 ................................................................................................... 50

2003 ................................................................................................... 60

2004 ................................................................................................... 70

2005 ................................................................................................... 80

2006................................................................................................... 90.

4 (e) ELECTION FOR PRE-2007 YEARS OF GROUPS

5 WITH INSURANCE COMPANIES.—For taxable years begin6 ning after December 31, 2000, and before January 1,

7 2007, the common parent of an affiliated group which in8 cludes 1 or more domestic insurance companies subject to

9 tax under section 801 of such Code may elect to treat all

10 such insurance companies as corporations which are not

11 includible corporations within the meaning of subsection

12 (b) of section 1504 of such Code, if, as of the date of

13 the enactment of this section—

14 (1) such affiliated group included 1 or more in15 surance companies subject to tax under section 801

16 of such Code, and

17 (2) no additional election was in effect under

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

19 day before the date of the enactment of this Act).

20 (f) NO CARRYBACK BEFORE JANUARY 1, 2001.—To

21 the extent that a consolidated net operating loss is allowed
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1 or increased by reason of the amendments made by this

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

3 year beginning before January 1, 2001.

4 (g) NONTERMINATION OF GROUP.—No affiliated

5 group shall terminate solely as a result of the amendments

6 made by this section.

7 (h) SUBSIDIARY STOCK BASIS ADJUSTMENTS.—A

8 parent corporation’s basis in the stock of a subsidiary cor9 poration shall be adjusted to reflect the preconsolidation

10 income, gain, deduction and loss incurred during a period

11 when such corporations were members of an affiliated

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

13 of such Code as in effect on the day before the date of

14 enactment of this Act) but were not included in a consoli15 dated return of such group by operation of section

16 1504(c)(2)(A) of such Code (as in effect on the day before

17 the date of the enactment of this Act).

18 (i) WAIVER OF 5-YEAR WAITING PERIOD.—Under

19 regulations prescribed by the Secretary of the Treasury

20 or his delegate, an automatic waiver from the 5-year wait21 ing period for reconsolidation provided in section

22 1504(a)(3) of such Code shall be granted to any corpora23 tion which was previously an includible corporation but

24 was subsequently deemed a nonincludible corporation as

25 a result of becoming a subsidiary of a corporation which
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1 was not an includible corporation solely by operation of

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

3 before the date of enactment of this Act).

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