Taxable Years Taxable Years Taxable Years Sec. 207. (a) (2) Foreign corpo Sec. 207. (a) (2) Foreign corpo See p. 318, Eighth Edition. Sec. 207. (a) (2) Foreign corporations.-The tax imposed by para- rations.-The tax imposed by para- rations. graph (1) shall apply to foreign graph (1) shall apply to foreign corporations as well as domestic corporations as well as domestic corporations; but foreign insur-corporations; but foreign insurance companies not carrying on an ance companies not carrying on an insurance business within the insurance business within the United States shall be taxable as United States shall be taxable as other foreign corporations. other foreign corporations. Taxable Years Beginning in 1943 Taxable Years Taxable Years United States shall not be taxable States shall not be taxable under Sec. 207. (b) Definition of income, etc. In the case of an insurance company subject to the tax imposed by this section Sec. 207. (b) (1) Gross investment income.-"Gross investment income" means the gross amount of income during the taxable year from interest, dividends, rents, and gains from sales or exchanges of capital assets to the extent provided in section 117; this section but shall be taxable as Sec. 207. (b) Definition of in- Sec. 207. (b) (1) Gross invest- Sec. 207. (b) Gross income.ment income.-"Gross investment Mutual marine-insurance compaincome" means the gross amount of nies shall include in gross income income during the taxable year the gross premiums collected and from interest, dividends, rents, and received by them less amounts paid gains from sales or exchanges of for reinsurance. capital assets to the extent provided in section 117; Sec. 207. (b) (2) Net premiums. Sec. 207. (b) (2) Net premiums. -"Net premiums" means gross-"Net premiums" means gross prepremiums (including deposits and miums (including deposits and asassessments) written or received on | sessments) written or received on insurance contracts during the tax-insurance contracts during the taxable year less return premiums able year less return premiums and and premiums paid or incurred for premiums paid or incurred for rereinsurance. Amounts returned insurance. Amounts returned where where the amount is not fixed in the amount is not fixed in the inthe insurance contract but depends surance contract but depends upon upon the experience of the company the experience of the company or or the discretion of the manage- the discretion of the management ment shall not be included in return premiums but shall be treated as dividends to policyholders under paragraph (3); shall not be included in return pre- Sec. 207. (b) (3) Dividends to Sec. 207. (b) (3) Dividends to policyholders. "Dividends to pol- policyholders.-"Dividends to policyholders" means dividends and icyholders" means dividends and similar distributions paid or de- similar distributions paid or declared to policyholders. The term clared to policyholders. The term "paid or declared" shall be con- "paid or declared" shall be construed according to the method reg-strued according to the method regularly employed in keeping the ularly employed in keeping the books of the insurance company; books of the insurance company; Sec. 207. (b) (4) Net income.— The term "net income" means the gross investment income less (A) Tax-free Interest. The amount of interest which under section 22 (b) (4) is excluded for the taxable year from gross income; Sec. 207. (b) (4) Net income.The term "net income" means the gross investment income less Sec. 207. (c) Deductions.-In addition to the deductions allowed to corporations by section 23 the following deductions to insurance companies shall also be allowed, unless otherwise allowed (A) Tax-free Interest. The amount of interest which under section 22 (b) (4) is excluded for the taxable year from gross income; (B) Investment Expenses.-In- (B) Investment Expenses.-In- Sec. 207. (c) (1) Mutual insurvestment expenses paid or accrued vestment expenses paid or accrued ance companies other than life induring the taxable year. If any during the taxable year. If any surance. In the case of mutual general expenses are in part as- general expenses are in part as- insurance companies other than signed to or included in the invest-signed to or included in the invest-life insurance companiesment expenses, the total deduction ment expenses, the total deduction (A) the net addition required by under this subparagraph shall not under this subparagraph shall not law to be made within the taxable exceed one-fourth of 1 per centum exceed one-fourth of 1 per centum year to reserve funds (including of the mean of the book value of of the mean of the book value of in the case of assessment insurance the invested assets held at the be- the invested assets held at the be- companies the actual deposit of ginning and end of the taxable year ginning and end of the taxable year sums with State or Territorial of plus one-fourth of the amount by plus one-fourth of the amount by ficers pursuant to law as additions Taxable Years Taxable Years Taxable Years Beginning before 1939 Sec. 207. (b) Gross income. Sec. 207. (b) Gross income.— Mutual marine-insurance compa- Mutual marine-insurance companies shall include in gross income nies shall include in gross income the gross premiums collected and the gross premiums collected and received by them less amounts paid received by them less amounts paid for reinsurance. for reinsurance. Sec. 207. (b) Gross income. See p. 320, Eighth Edition. Sec. 207. (c) Deductions.-In Sec. 207. (c) Deductions.-In addition to the deductions allowed addition to the deductions allowed to corporations by section 23 the to corporations by section 23 the following deductions to insurance following deductions to insurance companies shall also be allowed, companies shall also be allowed, unless otherwise allowed— unless otherwise allowed Sec. 207. (c) (1) Mutual insurance companies other than life insurance. In the case of mutual insurance companies other than life insurance companies Sec. 207. (c) (1) Mutual insurance companies other than life insurance.-In the case of mutual insurance companies other than life insurance companies (A) the net addition required by (A) the net addition required by law to be made within the taxable law to be made within the taxable year to reserve funds (including year to reserve funds (including in the case of assessment insurance in the case of assessment insurance companies the actual deposit of companies the actual deposit of sums with State or Territorial of- sums with State or Territorial officers pursuant to law as additions' ficers pursuant to law as additions Sec. 207. (c) Deductions. See p. 320, Eighth Edition. Sec. 207. (c) (1) Mutual insurance companies other than life insurance. See p. 320, Eighth Edition. Taxable Years Beginning in 1943 Taxable Years Taxable Years which net income computed with- which net income computed with- to guarantee or reserve funds); out any deduction for investment out any deduction for investment and expenses allowed by this subpara-expenses allowed by this subpara- (B) the sums other than divigraph, or for tax-free interest al- graph, or for tax-free interest al- dends paid within the taxable year lowed by subsection (b) (4) (A), lowed by subsection (b) (4) (A), on policy and annuity contracts. exceeds 334 per centum of the book exceeds 334 per centum of the book value of the mean of the invested value of the mean of the invested assets held at the beginning and end assets held at the beginning and end of the taxable year; of the taxable year; Sec. 207. (c) (2) Mutual marine insurance companies. In the case of mutual marine insurance companies, in addition to the deductions allowed in paragraph (1) of this subsection, unless otherwise allowed, amounts repaid to policyholders on account of premiums previously paid by them, and interest paid upon such amounts between the ascertainment and the payment thereof; (C) Real Estate Expenses.— (C) Real Estate Expenses.Taxes and other expenses paid or Taxes and other expenses paid or accrued during the taxable year accrued during the taxable year exclusively upon or with respect to exclusively upon or with respect to the real estate owned by the com- the real estate owned by the company, not including taxes assessed pany, not including taxes assessed against local benefits of a kind against local benefits of a kind tending to increase the value of the tending to increase the value of the property assessed, and not includ-property assessed, and not including any amount paid out for new ing any amount paid out for new Sec. 207. (c) (3) Mutual insurbuildings, or for permanent im- buildings, or for permanent_imance companies other than life and provements or betterments made to provements or betterments made to marine. In the case of mutual inincrease the value of any property. increase the value of any property. surance companies (including inThe deduction allowed by this The deduction allowed by this terinsurers and reciprocal underparagraph shall be allowed in the paragraph shall be allowed in the writers, but not including mutual case of taxes imposed upon a case of taxes imposed upon a life or mutual marine insurance shareholder of a company upon his shareholder of a company upon his companies) requiring their meminterest as shareholder, which are interest as shareholder, which are bers to make premium deposits to paid or accrued by the company paid or accrued by the company provide for losses and expenses, without reimbursement from the without reimbursement from the the amount of premium deposits shareholder, but in such cases no shareholder, but in such cases no returned to their policyholders and deduction shall be allowed the deduction shall be allowed the the amount of premium deposits shareholder for the amount of such shareholder for the amount of such retained for the payment of taxes; taxes; losses, expenses, and reinsurance (D) Depreciation.-A reasonable (D) Depreciation.-A reasonable allowance, as provided in section allowance, as provided in section 23 (1), for the exhaustion, wear and 23 (1), for the exhaustion, wear and tear of property, including a rea-tear of property, including a reasonable allowance for obsolescence; sonable allowance for obsolescence; (E) Interest Paid or Accrued.- (E) Interest Paid or Accrued.— All interest paid or accrued within All interest paid or accrued within the taxable year on indebtedness, the taxable year on indebtedness, except on indebtedness incurred or except on indebtedness incurred or continued to purchase or carry ob- continued to purchase or carry obligations (other than obligations of ligations (other than obligations of the United States issued after Sep- the United States issued after September 24, 1917, and originally sub-tember 24, 1917, and originally subscribed for by the taxpayer) the scribed for by the taxpayer) the interest upon which is wholly ex- interest upon which is wholly exempt from taxation under this empt from taxation under this chapchapter. ter. (F) Capital Losses.-Capital (F) Capital Losses.-Capital losses to the extent provided in sec- losses to the extent provided in section 117 plus losses from capital tion 117 plus losses from capital assets sold or exchanged in order assets sold or exchanged in order to obtain funds to meet abnormal to obtain funds to meet abnormal insurance losses and to provide for insurance losses and to provide for the payment of dividends and simi- the payment of dividends and similar distributions to policyholders.lar distributions to policyholders. Capital assets shall be considered as | Capital assets shall be considered as sold or exchanged in order to ob- sold or exchanged in order to obtain funds to meet abnormal insur-tain funds to meet abnormal insurance losses and to provide for the ance losses and to provide for the payment of dividends and similar payment of dividends and similar distributions to policyholders to the distributions to policyholders to the reserves. 1 Taxable Years to guarantee or reserve funds); and Taxable Years to guarantee or reserve funds); (B) the sums other than divi- (B) the sums other than dividends paid within the taxable year dends paid within the taxable year on policy and annuity contracts. on policy and annuity contracts. Sec. 207. (c) (2) Mutual marine Sec. 207. (c) (2) Mutual marine insurance companies. In the case insurance companies. In the case of mutual marine insurance com- of mutual marine insurance companies, in addition to the deduc-panies, in addition to the deductions allowed in paragraph (1) of tions allowed in paragraph (1) of this subsection, unless otherwise this subsection, unless otherwise allowed, amounts repaid to policy- allowed, amounts repaid to policyholders on account of premiums holders on account of premiums previously paid by them, and in- previously paid by them, and interest paid upon such amounts be- terest paid upon such amounts between the ascertainment and the tween the ascertainment and the payment thereof; payment thereof; Sec. 207. (c) (3) Mutual insur- Sec. 207. (c) (3) Mutual insurance companies other than life and ance companies other than life and marine. In the case of mutual in- marine.-In the case of mutual insurance companies (including in-surance companies (including interinsurers and reciprocal under- terinsurers and reciprocal underwriters, but not including mutual writers, but not including mutual life or mutual marine insurance life or mutual marine insurance companies) requiring their mem- companies) requiring their members to make premium deposits to bers to make premium deposits to provide for losses and expenses, provide for losses and expenses, the amount of premium deposits the amount of premium deposits returned to their policyholders and returned to their policyholders and the amount of premium deposits the amount of premium deposits retained for the payment of retained for the payment of losses, expenses, and reinsurance losses, expenses, and reinsurance Taxable Years Beginning before 1939 Sec. 207. (c) (2) Mutual marine insurance companies. See p. 320, Eighth Edition. Sec. 207. (c) (3) Mutual insurance companies other than life and marine. See p. 320, Eighth Edition. |