I 
119TH CONGRESS 
1ST SESSION H. R. 2567 
To amend the Internal Revenue Code of 1986 to provide special rules for 
purposes of determining if financial guaranty insurance companies are 
qualifying insurance corporations under the passive foreign investment 
company rules. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 1, 2025 
Ms. MOORE of Wisconsin (for herself and Mr. SMITH of Nebraska) 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 provide 
special rules for purposes of determining if financial 
guaranty insurance companies are qualifying insurance 
corporations under the passive foreign investment com-
pany rules. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. TREATMENT OF FINANCIAL GUARANTY INSUR-
ANCE COMPANIES AS QUALIFYING INSUR-
ANCE CORPORATIONS UNDER PASSIVE FOR-
EIGN INVESTMENT COMPANY RULES. 
(a) IN GENERAL.—Section 1297(f)(3) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(C) SPECIAL
RULES
FOR
FINANCIAL 
GUARANTY INSURANCE COMPANIES.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
subparagraphs (A)(ii) and (B), the applica-
ble insurance liabilities of a financial guar-
anty insurance company shall include its 
unearned premium reserves if— 
‘‘(I) such company is prohibited 
under generally accepted accounting 
principles from reporting on its appli-
cable financial statements reserves for 
losses and loss adjustment expenses 
with respect to a financial guaranty 
insurance or reinsurance contract ex-
cept to the extent that losses and loss 
adjustment expenses are expected to 
exceed the unearned premium reserves 
on the contract, 
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‘‘(II) the applicable financial 
statement of such company reports fi-
nancial guaranty exposure of at least 
15-to-1 or State or local bond expo-
sure of at least 9-to-1, and 
‘‘(III) such company includes in 
its insurance liabilities only its un-
earned premium reserves relating to 
insurance written or assumed that is 
within the single risk limits set forth 
in subsection (D) of section 4 of the 
Financial Guaranty Insurance Guide-
line (modified by using total share-
holder’s equity as reported on the ap-
plicable financial statement of the 
company rather than aggregate of the 
surplus to policyholders and contin-
gency reserves). 
‘‘(ii) APPLICATION
OF
ALTERNATIVE 
FACTS AND CIRCUMSTANCES TEST.—A fi-
nancial guaranty insurance company shall 
be treated as satisfying the requirements 
of paragraph (2)(B). 
‘‘(iii) FINANCIAL
GUARANTY
INSUR-
ANCE
COMPANY.—For purposes of this 
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subparagraph, the term ‘financial guaranty 
insurance company’ means any insurance 
company the sole business of which is writ-
ing or reinsuring financial guaranty insur-
ance (as defined in subsection (A) of sec-
tion 1 of the Financial Guaranty Insurance 
Guideline) which is permitted under sub-
section (B) of section 4 of such Guideline. 
‘‘(iv) FINANCIAL
GUARANTY
EXPO-
SURE.—For purposes of this subpara-
graph, the term ‘financial guaranty expo-
sure’ means the ratio of— 
‘‘(I) the net debt service out-
standing insured or reinsured by the 
company that is within the single risk 
limits set forth in the Financial Guar-
anty Insurance Guideline (as reported 
on such company’s applicable financial 
statement), to 
‘‘(II) the company’s total assets 
(as so reported). 
‘‘(v) STATE OR LOCAL BOND EXPO-
SURE.—For purposes of this subpara-
graph, the term ‘State or local bond expo-
sure’ means the ratio of— 
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‘‘(I) the net unpaid principal of 
State or local bonds (as defined in 
section 103(c)(1)) insured or rein-
sured by the company that is within 
the single risk limits set forth in the 
Financial Guaranty Insurance Guide-
line (as reported on such company’s 
applicable financial statement), to 
‘‘(II) the company’s total assets 
(as so reported). 
‘‘(vi) FINANCIAL
GUARANTY
INSUR-
ANCE
GUIDELINE.—For purposes of this 
subparagraph— 
‘‘(I) IN
GENERAL.—The term 
‘Financial Guaranty Insurance Guide-
line’ means the October 2008 model 
regulation that was adopted by the 
National Association of Insurance 
Commissioners on December 4, 2007. 
‘‘(II) DETERMINATIONS MADE BY 
SECRETARY.—The determination of 
whether any provision of the Financial 
Guaranty Insurance Guideline has 
been satisfied shall be made by the 
Secretary.’’. 
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poration and who takes the position that 
such corporation is not a passive foreign 
investment company shall report to the 
Secretary such information with respect to 
such corporation as the Secretary may re-
quire. 
‘‘(ii) SPECIFIED NON-PUBLICLY TRAD-
ED FOREIGN CORPORATION.—For purposes 
of this subparagraph, the term ‘specified 
non-publicly traded foreign corporation’ 
means any foreign corporation— 
‘‘(I) which would be a passive 
foreign investment company if sub-
section (b)(2)(B) did not apply, and 
‘‘(II) no interest in which is trad-
ed on an established securities mar-
ket.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to taxable years beginning 
after December 31, 2024. 
(2) REPORTING.—The amendment made by 
subsection (b) shall apply to reports made after De-
cember 31, 2024. 
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(3) CERTAIN
FINANCIAL
GUARANTEE
INSUR-
ANCE COMPANIES NOT TREATED AS PASSIVE FOR-
EIGN INVESTMENT COMPANIES MERELY BY REASON 
OF STATUS IN CERTAIN PRIOR TAXABLE YEARS.— 
(A) IN GENERAL.—In the case of any tax-
able year of a qualified financial guarantee in-
surance company beginning after December 31, 
2024, section 1298(b)(1) of the Internal Rev-
enue Code of 1986 shall be applied to stock 
held by any taxpayer in such company by treat-
ing the specified grace period with respect to 
such company as not part of such taxpayer’s 
holding period of such stock. 
(B) QUALIFIED
FINANCIAL
GUARANTEE 
INSURANCE
COMPANY.—For purposes of this 
paragraph, the term ‘‘qualified financial guar-
antee insurance company’’ means any financial 
guarantee insurance company (as defined in 
subparagraph (C) of section 1297(f)(3) of the 
Internal Revenue Code of 1986, as added by 
this section) which would not be a passive for-
eign investment company if— 
(i) such subparagraph applied to the 
specified grace period, and 
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(ii) in the case of any taxable year 
ending before January 1, 2019, clause 
(i)(II) of such subparagraph were applied 
by substituting ‘‘8-to-1’’ for ‘‘9-to-1’’. 
(C) SPECIFIED GRACE PERIOD.—For pur-
poses of this paragraph, the term ‘‘specified 
grace period’’ means, with respect to any finan-
cial guarantee insurance company, the period 
beginning with such company’s first taxable 
year beginning after December 31, 2017, and 
ending with such company’s last taxable year 
beginning before January 1, 2025. 
(D) REGULATIONS
AND
OTHER
GUID-
ANCE.—The Secretary of the Treasury (or the 
Secretary’s delegate) shall issue such regula-
tions or other guidance as may be necessary or 
appropriate to provide for the proper treatment 
of any financial guarantee insurance company 
which ceases to be treated as a passive foreign 
investment company by reason of subparagraph 
(A), including regulations or other guidance 
which provide for— 
(i) an opportunity for the revocation 
of any election made under section 1295(b) 
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or 1296(k) of the Internal Revenue Code 
of 1986, and 
(ii) the application of section 1293(c) 
of such Code to periods after such com-
pany ceases to be treated as a passive for-
eign investment company. 
Æ 
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