I
106TH CONGRESS
2D SESSION
H. R. 3905
To amend the Internal Revenue Code of 1986 to repeal the provision taxing
policyholder dividends of mutual life insurance companies and to repeal
the policyholders surplus account provisions.
IN THE HOUSE OF REPRESENTATIVES
MARCH 13, 2000
Mr. HOUGHTON (for himself, Mr. NEAL of Massachusetts, Mrs. JOHNSON of
Connecticut, Mr. KLECZKA, Mr. SAM JOHNSON of Texas, Mr. MATSUI,
Mr. MCCRERY, Mr. CARDIN, Mr. LEWIS of Kentucky, and Mr. BECERRA)
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 repeal
the provision taxing policyholder dividends of mutual life
insurance companies and to repeal the policyholders sur-
plus account provisions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Life Insurance Tax
Simplification Act of 2000’’.
SEC. 2. REPEAL OF REDUCTION OF DEDUCTIONS FOR MU-
TUAL LIFE INSURANCE COMPANIES.
(a) IN GENERAL.—Section 809 of the Internal Rev-
enue Code of 1986 (relating to reductions in certain de-
duction of mutual life insurance companies) is hereby re-
pealed.
(b) CONFORMING AMENDMENTS.—
(1) Subsections (a)(2)(B) and (b)(1)(B) of sec-
tion 807 of such Code are each amended by striking
‘‘the sum of (i)’’ and by striking ‘‘plus (ii) any ex-
cess described in section 809(a)(2) for the taxable
year,’’.
(2)(A) The last sentence of section 807(d)(1) of
such 
Code 
is 
amended 
by 
striking 
‘‘section
809(b)(4)(B)’’ and inserting ‘‘paragraph (6)’’.
(B) Subsection (d) of section 807 of such Code
is amended by adding at the end the following new
paragraph:
‘‘(6) STATUTORY RESERVES.—The term ‘statu-
tory reserves’ means the aggregate amount set forth
in the annual statement with respect to items de-
scribed in section 807(c). Such term shall not in-
clude any reserve attributable to a deferred and un-
collected premium if the establishment of such re-
serve is not permitted under section 811(c).’’
(3) Subsection (c) of section 808 of such Code
is amended to read as follows:
‘‘(c) AMOUNT OF DEDUCTION.—The deduction for
policyholder dividends for any taxable year shall be an
amount equal to the policyholder dividends paid or accrued
during the taxable year.’’
(4) Subparagraph (A) of section 812(b)(3) of
such Code is amended by striking ‘‘sections 808 and
809’’ and inserting ‘‘section 808’’.
(5) Subsection (c) of section 817 of such Code
is amended by striking ‘‘(other than section 809)’’.
(6) Subsection (c) of section 842 of such Code
is amended by striking paragraph (3) and by redes-
ignating paragraph (4) as paragraph (3).
(7) The table of sections for subpart C of part
I of subchapter L of chapter 1 of such Code is
amended by striking the item relating to section
809.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
SEC. 3. REPEAL OF POLICYHOLDERS SURPLUS ACCOUNT
PROVISIONS.
(a) IN GENERAL.—Section 815 of the Internal Rev-
enue Code of 1986 (relating to distributions to share-
holders from pre-1984 policyholders surplus account) is
hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) Section 801 of such Code is amended by
striking subsection (c).
(2) The table of sections for subpart D of part
I of subchapter L of chapter 1 of such Code is
amended by striking the item relating to section
815.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1999.
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