I 
116TH CONGRESS 
2D SESSION 
H. R. 5746 
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 
FEBRUARY 3, 2020 
Ms. MOORE (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 RULE FOR FINANCIAL GUAR-
ANTY 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 such reserve 
amounts 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, 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) FINANCIAL
GUARANTY
INSUR-
ANCE
COMPANY.—For purposes of this 
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 
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Guideline) which is permitted under sub-
section (B) of section 4 of such Guideline. 
‘‘(iii) 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). 
‘‘(iv) FINANCIAL
GUARANTY
INSUR-
ANCE
GUIDELINE.—For purposes of this 
subparagraph, the term ‘Financial Guar-
anty Insurance Guideline’ means the Octo-
ber 2008 model regulation that was adopt-
ed by the National Association of Insur-
ance Commissioners on December 4, 
2007.’’. 
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(b) 
REPORTING
OF
CERTAIN
ITEMS.—Section 
1297(f)(4) of such Code is amended by adding at the end 
the following new subparagraph: 
‘‘(C) CLARIFICATION THAT CERTAIN ITEMS 
ON
APPLICABLE
FINANCIAL
STATEMENT
BE 
SEPARATELY
REPORTED
WITH
RESPECT
TO 
CORPORATION.—An amount described in para-
graph (1)(B) or clause (i)(II), (i)(III), (iii)(I), 
or (iii)(II) of paragraph (3)(C) shall not be 
treated as reported on an applicable financial 
statement for purposes of this section unless 
such amount is separately reported on such 
statement with respect to the corporation re-
ferred to in paragraph (1). 
‘‘(D) AUTHORITY OF SECRETARY TO RE-
QUIRE REPORTING.— 
‘‘(i) 
IN
GENERAL.—Each 
United 
States person who owns an interest in a 
specified non-publicly traded foreign cor-
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. 
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‘‘(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 take effect as if included in section 
14501 of Public Law 115–97. 
(2) REPORTING.—The amendment made by 
subsection (b) shall apply to reports made after the 
date of the enactment of this Act. 
Æ 
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