An Act to permit duty-free treatment of limestone, when imported to be used in the manufacture of cement, pursuant to the Trade Expansion Act of 1962
PL 90-240 (H.R.1141), enacted 01/02/1968

776 
PUBLIC LAW 90-240-JAN. 2, 1968 
[81 STAT. 
Public Law 90-240 
January 2, 1968 
AN ACT 
[H. R. 1141] 
To continue the duty-free status of certain gifts by members of the Armed Forces 
serving in combat zones, and for other purposes. 
Armed Forces. 
Gifts by mem-
bers in combat 
zones. 
Duty-free entry. 
80 Stat. 71. 
Effective date. 
Carriers of 
bonded merchan-
dise. 
76 Stat. 1130. 
Cigars. 
Federal excise 
tax, computation. 
72 Stat. 1414; 
79 Stat. 150. 
26 use 5701. 
Insurance com-
panies. 
Taxable income. 
68A Stat. 264; 
76 Stat. 998. 
Deductions. 
68A Stat. 265. 
Be it enacted hy the Sencute and House of Representatives 
of the 
United States of America in Congress assembled, That (a) item 915.25 
(relating to bona fide gifts, not exceeding $50 in retail value, from 
members of the Armed Forces serving in combat zones) of the Tariff 
Schedules of the United States (19 U.S.C. 1202} is amended by strik-
ing out "On or before 12/31/67" and inserting in lieu thereof "On or 
before 12/31/69". 
(b) The headnotes for part 1, subpart B of the Appendix to such 
Schedules are amended by adding at the end thereof the following 
headnote: 
"2. Articles exempted under item 915.25 from the payment of duty 
shall be exempt also from the payment of any internal revenue tax 
imposed upon or by reason of importation." 
SEC. 2. The amendments made by the first section of this Act shall 
apply with respect to articles entered, or withdrawn from warehouse, 
for consumption on or after January 1,1968. 
SEC. 3. Section 551 of the Tariff Act of 1930, as amended (19 U.S.C. 
1551), is amended by adding at the end thereof the following new sen-
tence : "A private carrier, upon application, may, in the discretion of 
the Secretary, be designated under the preceding sentence as a carrier 
of bonded merchandise, subject to such regulations and, in the case of 
each applicant, to such special terms and conditions as the Secretary 
may prescribe to safeguard the revenues of the United States with re-
spect to the transportation of bonded merchandise by such applicant." 
SEC. 4. (a) Section 5701(a) of the Internal Revenue Code of 1954 
(relating to rate of tax on cigars) is amended by adding after the 
penultimate sentence the following new sentence: "For purposes of 
the preceding sentence, the amount of State or local tax excluded 
from the retail price shall be the actual tax imposed; except thatj if 
the combined taxes result in a numerical figure ending in a fraction 
of a cent, the amount so excluded shall be rounded to the next highest 
full cent unless such rounding would result in a tax lower than the tax 
which would be imposed in the absence of State or local tax." 
(b) The amendment made by subsection (a) shall apply to the 
removal of cigars on or after the first day of the first calendar quarter 
w'hich begins more than 30 days after the date of the enactment of 
this Act. 
SEC. 5. (a) Section 832(b) (1) of the Internal Revenue Code of 
1954 (relating to insurance company gross income) is amended by 
striking out ''and" at the end of subparagraph (C), by striking out 
the period at the end of subparagraph (D) and inserting in lieu 
thereof ", and", and by adding at the end thereof the following new 
subparagraph: 
"(E) in the case of a company which whites mortgage 
guaranty insurance, the amount required by subsection (e) 
(5] to be subtracted from the mortgage guaranty account." 
(b) Section 832(c) of such Code (relating to insurance company 
deductions) is amended by striking out "and" at the end of para-
g .ph (11), by striking out the period at the end of paragraph (12) 
and inserting in lieu thereof "; and", and by adding at the end the 
following new paragraph: 
"(13) in the case of a company which writes mortgage guar-
anty insurance, the deduction allowed by subsection (e)." 
81 STAT.] 
PUBLIC LAW 90^240-JAN. 2, 1968 
777 
(c) Section 832 of such Code (relating to insurance company tax- 
SSA stat. 264; 
able income) is amended by adding at tne end thereof the following ^°26*usc 8
^
3
2
'
. 
new subsection: 
"(e) SPECIAL DEDUCTION AND INCOME ACCOUNT.—^In the case of 
taxable years beginning after December 31,1966, of a company which 
writes mortgage guaranty insurance— 
"(1) ADDITIONAL DEDUCTION.—There shall be allowed as a 
deduction for the taxable year, if bonds are purchased as required 
by paragraph (2), the sum of— 
" (A) an amount representing the amount required by State 
law or regulation to be set aside in a reserve for mortgage 
guaranty insurance losses resulting from adverse economic 
cycles; and 
"(B) an amount representing the aggregate of amounts so 
set aside in such reserve for the 8 preceding taxable years to 
the extent such amounts were not deducted under this para-
graph in such preceding taxable years, 
except that the deduction allowable for the taxable year under 
this paragraph shall not exceed the taxable income for the tax-
able year computed without regard to this paragraph or to any 
carryback of a net operating loss. For purposes of this paragraph, 
the amount required by State law or regulation to be so set aside 
in any taxable year shall not exceed 50 percent of premiums 
earned on insurance contracts (as defined in subsection (b) (4)) 
with respect to mortgage guaranty insurance for such year. For 
purposes of this subsection, all amounts shall be taken into account 
on a first-in-time basis. The computation and deduction under 
this section of losses incurred (including losses resulting from 
adverse economic cycles) shall not be affected by the provisions 
of this subsection. For purposes of this subsection, the terms 'pre-
ceding taxable years' and 'preceding taxable year' shall not 
include taxable years which began before January 1, 1967. 
" (2) PURCHASE OF BONDS.—The deduction under paragraph (1) 
shall be allowed only to the extent that tax and loss bonds are pur-
chased in an amount equal to the tax benefit attributable to such 
deduction, as determined under regulations prescribed by the Sec-
retary or his delegate, on or before the date that any taxes (deter-
mined without regard to this subsection) due for the taxable year 
for which the deduction is allowed are due to be paid, as if no 
election to make installment payments under section 6152 is 
^SA stat. 757. 
made. If a deduction would be allowed but for the fact that tax 
and loss bonds were not timely purchased, such deduction shall be 
allowed to the extent such purchases are made within a reasonable 
time, as determined by the Secretary or his delegate, if all interest 
and penalties, computed as if this sentence did not apply, are paid. 
"(3) MORTGAGE GUARANTY ACCOUNT.—^Each company which 
writes mortgage guaranty insurance shall, for purposes of this 
part, establish ana maintain a mortgage guaranty account. 
" (4) ADDITIONS TO ACCOUNT.—There shall be added to the mort-
gage guaranty account for each taxable year an amount equal to 
the amount allowed as a deduction for the taxable year under 
paragraph (1). 
"(5) 
SUBTRACTIONS FROM ACCOUNT AND INCLUSION IN GROSS IN-
COME.—After applying paragraph (4), there shall be subtracted 
for the taxable year from the mortgage guaranty account and in-
cluded in gross income— 
26 use 615 2. 
"778 
PUBLIC LAW 90-240-JAN. 2, 1968 
[81 STAT. 
68A Stat. 124. 
68A Stat. 264; 
80 Stat. 1562. 
Corporate acqui-
sitions, carry-
over. 
73 Stat. 139. 
26 u s e 801-843. 
Second Liberty 
Bond Act, amend-
ment. 
40 Stat. 288. 
Ante, p. 99. 
, j ,, 
"(A) the amount (if any) remaining which was added to 
, the account for the tenth preceding taxable year, and 
"(B) the excess (if any) of the aggregate amount in the 
mortgage guaranty account over the aggregate amount in 
the reserve referred to in paragraph (1) (A). For purposes 
of determining such excess, the aggregate amount in the mort-
gage guaranty account shall be determined after applying 
subparagraph (A), and the aggregate amount in the reserve 
referred to in paragraph (1) (A) shall be determined by dis-
regarding any amounts remaining in such reserve added for 
taxable years beginning before January 1, 1967, 
., . 
"(C) an amount (if any) equal to the net operating loss 
for the taxable year computed without regard to this sub-
paragraph, and 
"(D) any amount improperly subtracted from the account 
under subparagraph (A), (B), or (C) to the extent that tax 
and loss bonds were redeemed with respect to such amount. 
If a company liquidates or otherwise terminates its mortgage 
.^.,, guaranty insurance business and does not transfer or distribute 
such business in an acquisition of assets referred to in section 
381(a), the entire amount remaining in such account shall be 
subtracted. Except in the case where a company transfers or dis-
,5, tributes its mortgage guaranty insurance in an acquisition of 
assets referred to in section 381(a), if the company is not subject 
to the tax imposed by section 831 for any taxable year, the entire 
amount in the account at the close of the preceding taxable year 
shall be subtracted from the account in such preceding taxable 
year." 
(d) Section 381(c) (22) of such Code (relating to carryovers in cer-
tain corporate acquisitions) is amended to read as follows: 
"(22) SUCCESSOR INSURANCE COMPANY.—If the acquiring cor-
poration is an insurance company taxable under subchapter L, 
there shall be taken into account (to the extent proper to carry 
out the purposes of this section and of subchapter L, and under 
such regulations as may be prescribed by the Secretary or his 
delegate) the items required to be taken into account for purposes 
of subchapter L in respect of the distributor or transferor cor-
poration." 
(e) The amendments made by subsections (a), (b), (c), and (d) 
shall apply to taxable years beginning after December 31, 1966, ex-
cept that so much of section 832(e) (2) of the Internal Revenue Code 
of 1954 (as added by the amendment made by subsection (c)) as pro-
vides for payment of interest and penalties for failure to make a 
timely purchase of tax and loss bonds shall not apply with respect 
to any period during which such bonds are not available for purchase. 
(f) The Second Liberty Bond Act is amended by adding at the end 
thereof the following new section: 
"SEC. 26. The Secretary of the Treasury is authorized to issue, from 
time to time, tax and loss bonds, the proceeds of which shall be avail-
able to meet any public expenditures authorized by law, and to retire 
any outstanding obligations of the United States issued under this 
Act. Tax and loss bonds shall be nontransferable except as provided 
by the Secretary of the Treasury, shall bear no interest and shall be 
issued in such amounts, subject to the limitations imposed by section 
21 of this Act, as are necessary to permit persons to comply with section 
832(e) of the Internal Revenue Code of 1954. Tax and loss bonds shall 
81 STAT.] 
PUBLIC LAW 90-240-JAN. 2, 1968 
779 
be issued in such amounts and on such terms and conditions as 
required by section 832(e) of such Code and as the Secretary of the 
Treasury shall prescribe. With respect to any taxable year in which 
amounts are subtracted from the mortgage guaranty account referred 
to in section 832(e) (3) of such Code, an amount of tax and loss bonds 
which was purchased under section 832(e)(2) of such Code with 
respect to the amount so subtracted shall be redeemed, and to the 
extent necessary shall be applied to pay any taxes due as a result of the 
inclusion under section 82(b) (1) (E) of such Code of amounts in gross 
income. In addition, tax and loss bonds may be redeemed as prescribed 
by the Secretary of the Treasury." 
(g) (1) In the case of taxable years beginning before 1967, a com-
pany shall treat additions to a reserve, required by State law or 
regulations for mortgage guaranty insurance losses resulting from 
adverse economic cycles, as unearned premiums for purposes of sec-
tion 832(b) (4) of the Internal Kevenue Code of 1954, but the amount 
so treated as unearned premiums in a taxable year shall not exceed 
50 percent of premiums earned on insurance contracts (as defined in 
section 832(b)(4) of such Code), determined without regard to 
amounts added to the reserve, with respect to mortgage guaranty 
insurance for such year. The amount of unearned premiums at the 
close of 1966 shall be determined without regard to the preceding 
sentence for the purpose of applying section 832(b) (4) of such Code 
to 1967. Additions to such a reserve shall not be treated as unearned 
premiums for any taxable year beginning after 1966. 
(2) If a mortgage guaranty insurance company made additions 
to a reserve which were so treated as unearned premiums described 
in paragraph (1), such company, in taxable years beginning after 
1966, shall mclude in gross income (in addition to the items specified 
in section 832(b) (1) of such Code) the sum of the following amounts 
until there is included in gross income an amount equal to the aggre-
gate additions to the reserve described in paragraph (1) for taxable 
years beginning before 1967: 
(A) an amount (if any) equal to the excess of losses incurred 
(as defined in section 832(b) (5) of such Code) for the taxable 
year over 35 percent of premiums earned on insurance contracts 
during the taxable year (as defined in section 832(b) (4) of such 
Code), determined without regard to amounts added to the reserve 
referred to an paragraph (1), with respect to mortgage guaranty 
insurance, 
(B) the amount (if any) remaining which was added to the 
reserve for the tenth preceding taxable year, and 
(C) the excess (if any) of— 
(i) the aggregate of amounts so treated as unearned pre-
miums for all taxable years beginning before 1967 less the 
total of the amounts included in gross income under this 
paragraph for prior taxable years and the amounts included 
in gross income under subparagraphs (A) and (B) for the 
taxable year, over 
(ii) the aggregate of the additions made for taxable years 
beginning before 1967 which remain in the reserve at the close 
of the taxable year. 
Amounts shall be taken into account on a first-in-time basis. For 
purposes of section 832(e) of such Code and this paragraph, if part 
of the reserve is reduced under State law or regulation, such reduction 
shall first apply to the extent of amounts added to the reserve for 
Ante, p. 777. 
68A Stat. 264. 
26 u s e 832. 
780 
PUBLIC LAW 90-241-JAN. 2, 1968 
[81 STAT. 
taxable years beginning before 1967, and only then to amounts added 
thereafter. 
(3) The provisions of this subsection shall apply to taxable years 
beginning after December 31, 1956. 
Approved January 2, 1968. 
January 2, 1968 
[H. R. 11542] 
Marshall County, 
Ind. 
Public Law 90-241 
AN ACT 
For the relief of Marshall County, Indiana. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America 
in Congress assembled^ That Marshall 
County, Indiana, is relieved of liability to the United States in the 
amount of $1,801.25, representing the amount of Federal civil defense 
matching funds advanced to Marshall County, Indiana, in July 1961 
toward the cost of radio equipment purchased by it for civil defense 
purposes prior to the required approval of the project under which 
such equipment was purchased and prior to the date of availability 
of the applicable Federal appropriation. In the audit and settlement 
of the accounts of any certifying or disbursing officer of the United 
States, credit shall be given for amounts for which liability is relieved 
by this Act. 
SEC. 2. The Secretary of the Treasury is hereby authorized and 
directed to pay, out of any money in the Treasury not otherwise 
appropriated, to Marshall County, Indiana, an amount equal to 
the aggregate of the amounts paid by it, or withheld from sums 
otherwise due it, on account of the liability to the United States re-
ferred to in the first section of this Act. No part of the amount ap-
propriated in this section shall be paid or delivered to or received by 
any agent or attorney on account of services rendered in connection 
with this claim, and the same shall be unlawful, any contract to the 
contrary notwithstanding. Any person violating the provisions of 
this Act shall be deemed guilty of a misdemeanor and upon conviction 
thereof shall be fined in any sum not exceeding $1,000. 
Approved January 2, 1968. 
January 2, 1968 
[H. R. 13273] 
80 Stat. 207. 
33 u s e 1104. 
33 u s e 1102. 
Public Law 90-242 
AN ACT 
To amend the Marine Resources and Engineering Development Act of 1966, as 
amended, to extend the period of time within which the Commission on Marine 
Science, Engineering, and Resources is to submit its final report and to provide 
for a fixed expiration date for the National Council on Marine Resources and 
Engineering Development. 
Be it enacted hy the Senate and House of Re'presenta;tives of the 
United States of America in Congress assemhled^ That the Marine 
Resources and Engineering Development Act of 1966 is amended as 
follows: 
Subparagraph (h) of section 5 is amended by striking out "eight-
een" and inserting "twenty-four" in lieu thereof. 
SEC. 2. Subparagraph (f) of section 3 is amended by striking out 
"one hundred and twenty days after the submission of the final report 
of the Commission pursuant to section 5(h)." and inserting in lieu 
thereof " 'on June 30,1969.' ". 
Approved January 2, 1968.