26 U.S.C. § 848
In the case of an insurance company-
Paragraph (2) of subsection (a) shall be applied with respect to so much of the specified policy acquisition expenses of an insurance company for any taxable year as does not exceed $5,000,000 by substituting "60-month" for "180-month".
If the specified policy acquisition expenses of an insurance company exceed $10,000,000 for any taxable year, the $5,000,000 amount under paragraph (1) shall be reduced (but not below zero) by the amount of such excess.
In the case of any controlled group-
For purposes of the preceding sentence, the term "controlled group" means any controlled group of corporations as defined in section 1563(a); except that subsections (a)(4) and (b)(2)(D) of section 1563 shall not apply, and subsection (b)(2)(C) of section 1563 shall not apply to the extent it excludes a foreign corporation to which section 842 applies.
Paragraph (1) shall not apply to any specified policy acquisition expenses for any taxable year which are attributable to premiums or other consideration under any reinsurance contract.
For purposes of this section-
The term "specified policy acquisition expenses" means, with respect to any taxable year, so much of the general deductions for such taxable year as does not exceed the sum of-
The term "general deductions" means the deductions provided in part VI of subchapter B (sec. 161 and following, relating to itemized deductions) and in part I of subchapter D (sec. 401 and following, relating to pension, profit sharing, stock bonus plans, etc.).
For purposes of this section-
The term "net premiums" means, with respect to any category of specified insurance contracts set forth in subsection (c)(1), the excess (if any) of-
The rules of section 803(b) shall apply for purposes of the preceding sentence.
In the case of an insurance company subject to tax under part II of this subchapter, all computations entering into determinations of net premiums for any taxable year shall be made in the manner required under section 811(a) for life insurance companies.
Net premiums shall be determined without regard to section 808(e) and without regard to other similar amounts treated as paid to, and returned by, the policyholder.
For purposes of this section-
Except as otherwise provided in this paragraph, the term "specified insurance contract" means any life insurance, annuity, or noncancellable accident and health insurance contract (or any combination thereof).
The term "specified insurance contract" shall not include-
The term "group life insurance contract" means any life insurance contract-
Any annuity contract combined with noncancellable accident and health insurance shall be treated as a noncancellable accident and health insurance contract and not as an annuity contract.
The rules of section 816(e) shall apply for purposes of this section.
A contract which reinsures another contract shall be treated in the same manner as the reinsured contract.
An annuity or life insurance contract which includes a qualified long-term care insurance contract as a part of or a rider on such annuity or life insurance contract shall be treated as a specified insurance contract not described in subparagraph (A) or (B) of subsection (c)(1).
If for any taxable year there is a negative capitalization amount with respect to any category of specified insurance contracts set forth in subsection (c)(1)-
For purposes of paragraph (1), the term "negative capitalization amount" means, with respect to any category of specified insurance contracts, the percentage (applicable under subsection (c)(1) to such category) of the amount (if any) by which-
Nothing in any provision of law (other than this section or section 197) shall require the capitalization of any ceding commission incurred on or after September 30, 1990, under any contract which reinsures a specified insurance contract.
Except as provided in paragraph (2), the Secretary may provide that a type of insurance contract will be treated as a separate category for purposes of this section (and prescribe a percentage applicable to such category) if the Secretary determines that the deferral of acquisition expenses for such type of contract which would otherwise result under this section is substantially greater than the deferral of acquisition expenses which would have resulted if actual acquisition expenses (including indirect expenses) and the actual useful life for such type of contract had been used.
If the Secretary exercises his authority with respect to any type of contract under paragraph (1), the Secretary shall adjust the percentage which would otherwise have applied under subsection (c)(1) to the category which includes such type of contract so that the exercise of such authority does not result in a decrease in the amount of revenue received under this chapter by reason of this section for any fiscal year.
26 U.S.C. § 848
EDITORIAL NOTES
AMENDMENTS2017-Subsec. (a)(2). Pub. L. 115-97, §13519(a)(1), substituted "180-month" for "120-month".Subsec. (b)(1). Pub. L. 115-97, §13519(b), substituted "180-month" for "120-month". Subsec. (c)(1)(A). Pub. L. 115-97, §13519(a)(2), substituted "2.09 percent" for "1.75 percent".Subsec. (c)(1)(B). Pub. L. 115-97, §13519(a)(3), which directed substitution of "2.45 percent" for "2.05 percent" in par. (2), was executed to par. (1)(B) to reflect the probable intent of Congress.Subsec. (c)(1)(C). Pub. L. 115-97, §13519(a)(4), which directed substitution of "9.2 percent" for "7.7 percent" in par. (3), was executed to par. (1)(C) to reflect the probable intent of Congress. Subsec. (c) does not contain a par. (3). Subsec. (e)(1)(B)(iii). Pub. L. 115-97, §13517(b)(4), substituted "807(e)(3)" for "807(e)(4)".Subsec. (i). Pub. L. 115-97, §12001(b)(8)(C), struck out subsec. (i). Text read as follows: "For purposes of determining adjusted current earnings under section 56(g), acquisition expenses with respect to contracts described in clause (iii) of subsection (e)(1)(B) shall be capitalized and amortized in accordance with the treatment generally required under generally accepted accounting principles as if this subsection applied to such contracts for all taxable years." 2014-Subsec. (j). Pub. L. 113-295 struck out subsec. (j). Text read as follows: "In the case of any taxable year which includes September 30, 1990, the amount taken into account as the net premiums (or negative capitalization amount) with respect to any category of specified insurance contracts shall be the amount which bears the same ratio to the amount which (but for this subsection) would be so taken into account as the number of days in such taxable year on or after September 30, 1990, bears to the total number of days in such taxable year."2006-Subsec. (e)(6). Pub. L. 109-280 added par. (6). 2003-Subsec. (e)(1)(B)(v). Pub. L. 108-173 added cl. (v).2000-Subsec. (e)(1)(B)(iv). Pub. L. 106-554, §1(a)(7)[title II, §202(b)(10)], substituted "an Archer MSA" for "a Archer MSA". Pub. L. 106-554, §1(a)(7)[title II, §202(a)(5)], substituted "Archer MSA" for "medical savings account".1996-Subsec. (e)(1)(B)(iv). Pub. L. 104-191 added cl. (iv).1993-Subsec. (g). Pub. L. 103-66 substituted "this section or section 197" for "this section".
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2017 AMENDMENT Amendment by section 12001(b)(8)(C) of Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, see section 12001(c) of Pub. L. 115-97, set out as a note under section 11 of this title. Amendment by section 13517(b)(4) of Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, with transition rule and transition relief, see section 13517(c) of Pub. L. 115-97, set out as a note under section 807 of this title. Pub. L. 115-97, §13519(c), Dec. 22, 2017, 131 Stat. 2148, provided that: "(1) IN GENERAL.-The amendments made by this section [amending this section] shall apply to net premiums for taxable years beginning after December 31, 2017."(2) TRANSITION RULE.-Specified policy acquisition expenses first required to be capitalized in a taxable year beginning before January 1, 2018, will continue to be allowed as a deduction ratably over the 120-month period beginning with the first month in the second half of such taxable year."
EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113-295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113-295, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109-280 applicable to contracts issued after Dec. 31, 1996, but only with respect to taxable years beginning after Dec. 31, 2009, and to specified policy acquisition expenses determined for taxable years beginning after Dec. 31, 2009, see section 844(g)(1), (4) of Pub. L. 109-280, set out as a note under section 72 of this title.
EFFECTIVE DATE OF 2003 AMENDMENT Amendment by Pub. L. 108-173 applicable to taxable years beginning after Dec. 31, 2003, see section 1201(k) of Pub. L. 108-173, set out as a note under section 62 of this title.
EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104-191 applicable to taxable years beginning after Dec. 31, 1996, see section 301(j) of Pub. L. 104-191, set out as a note under section 62 of this title.
EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103-66 applicable, except as otherwise provided, with respect to property acquired after Aug. 10, 1993, see section 13261(g) of Pub. L. 103-66, set out as an Effective Date note under section 197 of this title.
EFFECTIVE DATE Pub. L. 101-508, §11301(d)(1), Nov. 5, 1990, 104 Stat. 1388-449, provided that: "The amendments made by subsections (a) and (c) [enacting this section] shall apply to taxable years ending on or after September 30, 1990. Any capitalization required by reason of such amendments shall not be treated as a change in method of accounting for purposes of the Internal Revenue Code of 1986."
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- Secretary
- The term "Secretary" means the Secretary of the Treasury or his delegate.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- fiscal year
- The term "fiscal year" means an accounting period of 12 months ending on the last day of any month other than December.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- taxable year
- The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.