end of the taxable year as a reserve end of the taxable year as a reserve Taxable Years Sec. 203. (a) (5) Real estate See p. 306, Eighth Edition. Sec. 203. (a) (5) Real estate ex- Sec. 203. (a) (5) Real estate expenses. Taxes and other expenses penses.-Taxes and other expenses expenses. paid during the taxable year exclu- paid during the taxable year exclusively upon or with respect to the sively upon or with respect to the real estate owned by the company, real estate owned by the company, not including taxes assessed against not including taxes assessed against local benefits of a kind tending to local benefits of a kind tending to increase the value of the property increase the value of the property assessed, and not including any assessed, and not including any amount paid out for new buildings, amount paid out for new buildings, or for permanent improvements or or for permanent improvements or betterments made to increase the betterments made to increase the value of any property. The deduc- value of any property. The deduction allowed by this paragraph tion allowed by this paragraph shall shall be allowed in the case of taxes be allowed in the case of taxes imimposed upon a shareholder of a posed upon a shareholder of a comcompany upon his interest as share-pany upon his interest as shareholder, which are paid by the holder, which are paid by the company without reimbursement company without reimbursement from the shareholder, but in such from, the shareholder, but in such cases no deduction shall be allowed cases no deduction shall be allowed the shareholder for the amount of the shareholder for the amount of such taxes; such taxes; Sec. 203. (a) (6) Depreciation.- Sec. 203. (a) (6) Depreciation.A reasonable allowance, as provided A reasonable allowance, as provided in section 23 (1), for the exhaus-in section 23 (1), for the exhaustion, wear and tear of property, tion, wear and tear, of property, including a reasonable allowance including a reasonable allowance for obsolescence; and for obsolescence; and Sec. 203. (a) (7) Interest.— Sec. 203. (a) (7) Interest.-All All interest paid within the taxable interest paid within the taxable year on its indebtedness, except on year on its indebtedness, except on indebtedness incurred or continued indebtedness incurred or continued to purchase or carry obligations to purchase or carry obligations (other than obligations of the (other than obligations of the United States issued after Sep- United States issued after Septemtember 24, 1917, and originally ber 24, 1917, and originally subsubscribed for by the taxpayer) the scribed for by the taxpayer) the interest upon which is wholly ex- interest upon which is wholly empt from taxation under this exempt from taxation under this chapter. chapter. Sec. 203. (a) (8) The amount of the net operating loss deduction provided in section 23 (s). (e) Sec. 203 (a) (8), I. R. C., supra, added by Sec. 211 (1), R. A. of 1939, approved June 29, 1939. Sec. 203. (a) (8) The amount of the net operating loss deduction provided in section 23 (s). Sec. 203 (a) (8), I. R. C., supra, added by Sec. 211 (e) (1), R. A. of 1939, approved June 29, 1939. Sec. 203. (b) Rental value of Sec. 203. (b) Rental value of real estate. The deduction under real estate. The deduction under subsection (a) (5) or (6) of this subsection (a) (5) or (6) of this section on account of any real es- section on account of any real estate owned and occupied in whole tate owned and occupied in whole or in part by a life insurance com- or in part by a life insurance com Sec. 203. (a) (6) Depreciation. See p. 308, Eighth Edition. Sec. 203. (a) (7) Interest. See p. 308, Eighth Edition. Sec. 203. (b) Rental value of real estate. See p. 308, Eighth Edition. Taxable Years Taxable Years Taxable Years Beginning in 1941 ance company, shall be limited to ance company, shall be limited to pany, shall be limited to an amount an amount which bears the same an amount which bears the same which bears the same ratio to such ratio to such deduction (computed ratio to such deduction (computed deduction (computed without rewithout regard to this subsection) without regard to this subsection) gard to this subsection) as the as the rental value of the space not as the rental value of the space not rental value of the space not so ocso occupied bears to the rental so occupied bears to the rental value cupied bears to the rental value of value of the entire property. of the entire property. the entire property. Sec. 201. (e) Amortization of premium and accrual of discount. -The gross income, the deduction provided in section 201 (c) (7) (A) and the credit allowed against net income in section 26 (a) shall each be decreased by the appropriate amortization of premium and increased by the appropriate accrual of discount attributable to the taxable year on bonds, notes, debentures or other evidences of indebtedness held by a life insurance company. Such amortization and accrual shall be determined (1) in accordance with the method regularly employed by such company, if such method is reasonable, and (2) in all other cases, in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. Sec. 201. (e) Amortization of premium and accrual of discount. -The gross income, the deduction provided in section 201 (c) (7) (A) and the credit allowed against net income in section 26 (a) shall each be decreased by the appropriate amortization of premium and increased by the appropriate accrual of discount attributable to the taxable year on bonds, notes, debentures or other evidences of indebtedness held by a life insurance company. Such amortization and accrual shall be determined (1) in accordance with the method regularly employed by such company, if such method is reasonable, and (2) in all other cases, in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. Sec. 201. (f) Double deductions. Sec. 201. (f) Double deductions. -Nothing in this section or in sec--Nothing in this section or in section 202 or 203 shall be construed tion 202 or 203 shall be construed to permit the same items to be to permit the same items to be twice deducted. twice deducted. Sec. 201. (g) Credits under section 26. For the purposes of this section, in computing normal tax net income and corporation surtax net income, the credits provided in section 26 shall be allowed in the manner and to the extent provided in sections 13 (a) and 15 (a). See note following Sec. 203. Sec. 202. Adjusted normal-tax net income. Sec. 201. (g) Credits under section 26.-For the purposes of this section, in computing normal tax net income and corporation surtax net income, the credits provided in section 26 shall be allowed in the manner and to the extent provided in sections 13 (a) and 15 (a). See note following Sec. 203, infra. Sec. 202. Adjusted normal-tax net income. Sec. 202. (a) Definition.-For Sec. 202. (a) Definition.-For the the purposes of section 201, the term purposes of section 201, the term "adjusted normal-tax net income" "adjusted normal-tax net income" means the normal-tax net income means the normal-tax net income minus the reserve and other policy minus the reserve and other policy liability credit provided in subsec- liability credit provided in subsection (b) and plus the amount of the tion (b) and plus the amount of the adjustment for certain reserves pro-adjustment for certain reserves provided in subsection (c). vided in subsection (c). Sec. 202. (b) Reserve and other policy liability credit.-As used in this section the term "reserve and other policy liability credit" means Sec. 202. (b) Reserve and other policy liability credit. As used in this section the term "reserve and other policy liability credit" means pany, shall be limited to an amount pany, shall be limited to an amount which bears the same ratio to such Taxable Years Beginning before 1939 Taxable Years an amount computed by multiplying the normal-tax net income by a figure, to be determined and proclaimed by the Secretary for each taxable year. This figure shall be based on such data with respect to life insurance companies for the preceding taxable year as the Secretary considers representative and shall be computed in accordance with the following formula: The ratio which (1) the aggregate of the sums of (A) 2 per centum of the reserves for deferred dividends, (B) interest paid, and (C) the product of (i) the mean of the adjusted reserves at the beginning and end of the taxable year and (ii) the reserve earnings rate bears to (2) the aggregate of the excess of net incomes computed without any deduction for tax-free interest, over the adjustment for certain reserves provided in subsection (c). Taxable Years an amount computed by multiplying Sec. 202. (c) Adjustment for Sec. 202. (c) Adjustment for certain reserves. In the case of a certain reserves. In the case of a life insurance company writing con-life insurance company writing contracts other than life insurance or tracts other than life insurance or annuity contracts (either separately annuity contracts (either separately or combined with noncancellable or combined with noncancellable health and accident insurance), the health and accident insurance), the term "adjustment for certain re- term "adjustment for certain reserves" means an amount equal to 34 per centum of the unearned premiums and unpaid losses on such other contracts which are not included in life insurance reserves. For the purpose of this subsection such unearned premiums shall not be considered to be less than 25 per centum of the net premiums written during the taxable year on such other contracts. See note following Sec. 203. Sec. 203. Adjusted corporation surtax net income. serves" means an amount equal to other contracts. See note following Sec. 203, infra. Sec. 203. Adjusted corporation surtax net income. Sec. 203. (a) Definition.-For Sec. 203. (a) Definition.-For the purposes of section 201, the the purposes of section 201, the term "adjusted corporation surtax term "adjusted corporation surtax net income" means the corporation net income" means the corporation surtax net income minus the reserve and other policy liability credit and plus the adjustment for certain reserves provided in section 202 (c). Sec. 203. (b) Reserve and other policy liability credit.-As used in this section, the term "reserve and other policy liability credit" means an amount computed by multiplying the corporation surtax net in surtax net income minus the reserve Sec. 203. (b) Reserve and other policy liability credit.-As used in this section, the term "reserve and other policy liability credit" means an amount computed by multiplying the corporation surtax net in Taxable Years Beginning in 1941 |