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105TH CONGRESS

2D SESSION H. R. 4795

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

of life insurance companies with other companies.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 10, 1998

Mr. CRANE (for himself, Mrs. JOHNSON of Connecticut, Mrs. KENNELLY of

Connecticut, Mr. RAMSTAD, and Mr. WELLER) 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

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

9 (7), respectively.
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1 (b) CONFORMING AMENDMENTS.—

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

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

4 application of certain losses against income of insur5 ance companies taxed under section 801) and by re6 designating subsections (d), (e), and (f) as sub7 sections (b), (c), and (d), respectively.

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

9 striking subsection (c) and by redesignating sub10 sections (d), (e), and (f) as subsections (c), (d), and

11 (e), respectively.

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

13 this section shall apply to taxable years beginning after

14 December 31, 1998.

15 (d) PHASEIN OF APPLICATION OF CERTAIN LOSSES

16 AGAINST INCOME OF INSURANCE COMPANIES.—For tax17 able years beginning after December 31, 1998, and before

18 January 1, 2005—

19 (1) IN GENERAL.—If—

20 (A) an affiliated group includes 1 or more

21 domestic insurance companies each of which is

22 subject to tax under section 801 of the Internal

23 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 operat7 ing 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:

1999 ............................................... 40

2000 ............................................... 50

2001 ............................................... 60

2002 ............................................... 70

2003 ............................................... 80

2004 ............................................... 90.

4 (e) ELECTION FOR PRE-2005 YEARS OF GROUPS

5 WITH INSURANCE COMPANIES.—For taxable years begin6 ning after December 31, 1998, and before January 1,

7 2005, the common parent of an affiliated group which in8 cludes 1 or more domestic insurance companies subject to

9 tax under section 801 may elect to treat all such insurance

10 companies as corporations which are not includible cor11 porations within the meaning of subsection (b) of section

12 1504 of such Code, provided that, as of the date of the

13 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 election was in effect under section

18 1504(c)(2) of such Code (as in effect on the day be19 fore the date of the enactment of this Act).

20 (f) NO CARRYBACK BEFORE JANUARY 1, 1999.—To

21 the extent that a consolidated net operating loss is allowed
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1 or increased by reason the amendments made by this sec2 tion, such loss may not be carried back to a taxable year

3 beginning before January 1, 1999.

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