For the rule as to when dividends are considered paid, see section 561 and the regulations thereunder. For the determination of the amounts held as reserves for dividends to policyholders, see paragraph (c) of this section. For special provisions relating to the treatment of dividends to policyholders paid with respect to policies reinsured under modified coinsurance contracts, see section 820(c)(5) and the regulations thereunder.
(1) Dividends paid to policyholders during the taxable year 1960 | $240 | |
(2) Decreased by the excess of item (a) over item (b): | ||
(a) Reserves for dividends to policyholders as of 12-31-59 (including amounts set aside as provided in paragraph (c)(2) of this section) | $250 | |
(b) Reserves for dividends to policyholders as of 12-31-60- | 175 | |
--- | 75 | |
(3) Deduction for dividends to policyholders under sec. 811(b) (computed without regard to the limitation of sec. 809(f)) | $165 |
(1) Dividends paid to policyholders during the taxable year 1961 | $125 | |
(2) Increased by the excess of item (a) over item (b): | ||
(a) Reserves for dividends to policyholders as of 12-31-61 | $110 | |
(b) Reserves for dividends to policyholders as of 12-31-60 | 100 | |
--- | 10 | |
(3) Deduction for dividends to policyholders under sec. 811(b) (computed without regard to the limitation of sec. 809(f)) | $135 |
(1) Dividends paid to policyholders during the taxable year 1961 | $125 | |
(2) Decreased by the excess of item (a) over item (b): | ||
(a) Reserves for dividends to policyholders as of 12-31-60 | $250 | |
(b) Reserves for dividends to policyholders as of 12-31-61 | 110 | |
--- | 140 | |
(3) Deduction for dividends to policyholders under sec. 811(b) (computed without regard to the limitation of sec. 809(f)) | $0 |
Under the provisions of section 811(b)(2) and paragraph (b)(2) of this section, since the decrease in the reserves for dividends to policyholders during the taxable year, $140 ($250 minus $110), exceeds the dividends to policyholders paid during the taxable year 1961, $125, S shall include $15 (the amount of such excess) as a net decrease under section 809(c)(2) and paragraph (a)(2) of § 1.809-4 in determining its gain or loss from operations for 1961.
26 C.F.R. §1.811-2