I
106TH CONGRESS
1ST SESSION
H. R. 2431
To amend the Internal Revenue Code of 1986 to permit the consolidation
of life insurance companies with other companies.
IN THE HOUSE OF REPRESENTATIVES
JULY 1, 1999
Mr. CRANE (for himself, Mrs. JOHNSON of Connecticut, Mr. RAMSTAD, Mr.
WELLER, Mr. PORTMAN, and Mr. SAM JOHNSON of Texas) 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.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. CONSOLIDATION OF LIFE INSURANCE COMPA-
NIES WITH OTHER COMPANIES PERMITTED.
(a) IN GENERAL.—Section 1504(b) of the Internal
Revenue Code of 1986 (defining includible corporation) is
amended by striking paragraph (2) and by redesignating
paragraphs (3) through (8) as paragraphs (2) through
(7), respectively.
(b) CONFORMING AMENDMENTS.—
(1) Section 1503 of such Code is amended by
striking subsection (c) (relating to special rule for
application of certain losses against income of insur-
ance companies taxed under section 801) and by re-
designating subsections (d), (e), and (f) as sub-
sections (b), (c), and (d), respectively.
(2) Section 1504 of such Code is amended by
striking subsection (c) and by redesignating sub-
sections (d), (e), and (f) as subsections (c), (d), and
(e), respectively.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
(d) PHASEIN OF APPLICATION OF CERTAIN LOSSES
AGAINST INCOME OF INSURANCE COMPANIES.—For tax-
able years beginning after December 31, 1998, and before
January 1, 2005—
(1) IN GENERAL.—If—
(A) an affiliated group includes 1 or more
domestic insurance companies each of which is
subject to tax under section 801 of the Internal
Revenue Code of 1986,
(B) the common parent of such group has
elected to treat all such companies as includible
corporations, and
(C) the consolidated taxable income of the
members of the group not taxed under such
section 801 results in a consolidated net oper-
ating loss for such taxable year,
then, under regulations prescribed by the Secretary
of the Treasury or his delegate, the amount of such
loss which cannot be absorbed in the applicable
carryback periods against the taxable income of such
members not taxed under such section 801 shall be
taken into account in determining the consolidated
taxable income of the affiliated group for such tax-
able year to the extent of the applicable percentage
of such loss or the applicable percentage of the tax-
able income of the members taxed under such sec-
tion 801, whichever is less. The unused portion of
such loss shall be available as a carryover, subject to
the same limitations (applicable to the sum of the
loss for the carryover year and the loss (or losses)
carried over to such year), in applicable carryover
years.
(2) APPLICABLE PERCENTAGE.—For purposes
of paragraph (1), the applicable percentage shall be
determined in accordance with the following table:
For taxable years beginning
in:
The applicable percentage is:
1999 ...................................................................................................
2000 ...................................................................................................
2001 ...................................................................................................
2002 ...................................................................................................
2003 ...................................................................................................
2004 ...................................................................................................
90.
(e) ELECTION FOR PRE-2005 YEARS OF GROUPS
WITH INSURANCE COMPANIES.—For taxable years begin-
ning after December 31, 1998, and before January 1,
2005, the common parent of an affiliated group which in-
cludes 1 or more domestic insurance companies subject to
tax under section 801 of such Code may elect to treat all
such insurance companies as corporations which are not
includible corporations within the meaning of subsection
(b) of section 1504 of such Code, if, as of the date of
the enactment of this section—
(1) such affiliated group included 1 or more in-
surance companies subject to tax under section 801
of such Code, and
(2) no additional election was in effect under
section 1504(c)(2) of such Code (as in effect on the
day before the date of the enactment of this Act).
(f) NO CARRYBACK BEFORE JANUARY 1, 1999.—To
the extent that a consolidated net operating loss is allowed
or increased by reason of the amendments made by this
section, such loss may not be carried back to a taxable
year beginning before January 1, 1999.
(g) NONTERMINATION
OF GROUP.—No affiliated
group shall terminate solely as a result of the amendments
made by this section.
(h) SUBSIDIARY STOCK BASIS ADJUSTMENTS.—A
parent corporation’s basis in the stock of a subsidiary cor-
poration shall be adjusted to reflect the preconsolidation
income, gain, deduction and loss incurred during a period
when such corporations were members of an affiliated
group (determined without regard to section 1504(b)(2)
of such Code as in effect on the day before the date of
enactment of this Act) but were not included in a consoli-
dated return of such group by operation of section
1504(c)(2)(A) of such Code (as in effect on the day before
the date of the enactment of this Act).
(i) WAIVER OF 5-YEAR WAITING PERIOD.—Under
regulations prescribed by the Secretary of the Treasury
or his delegate, an automatic waiver from the 5-year wait-
ing period for reconsolidation provided in section
1504(a)(3) of such Code shall be granted to any corpora-
tion which was previously an includible corporation but
was subsequently deemed a nonincludible corporation as
a result of becoming a subsidiary of a corporation which