,,ii  #aac? ,,congress  #a/ ,session    
,s4 #iia  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,may #bj1 #bjac ,mr4   
,m55dez introduc$ ! foll[+ bill2 :i* 0  
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to prev5t !       
avoidance ( tax by insurance companies  
?r\gh re9surance ) non-tax$ affiliates4 
#a4 ,prev5tion ( avoidance ( tax ?r\gh  
re9surance ) non-tax$ affiliates  7a7 ,9
 g5]al ,"p ,,iii ( sub*apt] ,l ( *apt]  
#a ( ! ,int]nal ,rev5ue ,code ( #aihf is
 am5d$ by add+ at ! end ! foll[+ new    
section3  #hdi4 ,special rules =        
re9surance ( non-life contracts )       
non-tax$ affiliates  7a7 ,9 g5]al ,!    
taxable income "u section #hca7;a7 or ! 
life insurance company taxable income "u
 section #hja7;b7 7z ! case may be7 ( an
 insurance company %all be det]m9$ by n 
tak+ into acc\nt--  7#a7 any non-tax$   
re9surance premium1  7#b7 any additional
 am\nt paid by su* insurance company )  
respect to ! re9surance = :i* su*       

non-tax$ re9surance premium is paid1 to 
! ext5t su* additional am\nt is prop]ly 
allocable to su* non-tax$ re9surance    
premium1 &  7#c7 any return premium1 c$+
 commission1 re9surance recov]$1 or o!r 
am\nt receiv$ by su* insurance company )
 respect to ! re9surance = :i* su*      
non-tax$ re9surance premium is paid1 to 
! ext5t su* return premium1 c$+         
commission1 re9surance recov]$1 or o!r  
am\nt is prop]ly allocable to su*       
non-tax$ re9surance premium4  7b7       
,non-,tax$ re9surance premiums ,=       
purposes ( ?is section--  7#a7 ,9 g5]al 
,! t]m non-tax$ re9surance premium means
 any re9surance premium paid directly or
 indirectly to an affiliat$ corporation 
) respect to re9surance ( risks 7o!r ?an
 except$ risks71 to ! ext5t t ! income  
attributable to ! premium is n subject  
to tax "u ?is subtitle 7ei!r z ! income 
( ! affiliat$ corporation or z am\nts   
includ$ 9 gross income by a ,unit$      
,/ates %>ehold] "u section #iea74  7#b7 
,except$ risks ,! t]m except$ risks     

means any risk ) respect to :i* res]ves 
describ$ 9 section #haf7;b77#a7 are     
e/abli%$4  7c7 ,affiliat$ corporations  
,= purposes ( ?is section1 a corporation
 %all be treat$ z affiliat$ ) an        
insurance company if bo? corporations   
w\ld be memb]s ( ! same controll$ gr\p (
 corporations 7z def9$ 9 section        
#aefc7;a77 if section #aefc 7 appli$--  
7#a7 by sub/itut+ at lea/ #ej p]c5t = at
 lea/ #hj p]c5t ea* place x appe>s 9    
subsection 7a77#a71 &  7#b7 )\t reg>d to
 subsections 7a77#d71 7b77#b77;,c71     
7b77#b77;,d71 & 7e77#c77;,c74  7d7      
,election ,to treat re9surance income z 
effectively connect$  7#a7 ,9 g5]al ,a  
specifi$ affiliat$ corporation may elect
 = any taxable ye> to treat specifi$    
re9surance income z--  7,a7 income      
effectively connect$ ) ! conduct ( a    
trade or bus9ess 9 ! ,unit$ ,/ates1 &   
7,b7 = purposes ( any treaty betwe5 !   
,unit$ ,/ates & any =eign c\ntry1 income
 attributable to a p]man5t e/abli%m5t 9 
! ,unit$ ,/ates4  7#b7 ,effect (        

election ,9 ! case ( any specifi$       
re9surance income ) respect to :i* !    
election "u ?is subsection applies--    
7,a7 ,d$uction all[$ = re9surance       
premiums ,= exemption f subsection 7a71 
see def9ition ( non-tax$ re9surance     
premiums 9 subsection 7b74  7,b7        
,exception f excise tax ,! tax impos$ by
 section #dcga %all n apply ) respect to
 any income treat$ z effectively        
connect$ ) ! conduct ( a trade or       
bus9ess 9 ! ,unit$ ,/ates "u p>agraph   
7#a74  7,c7 ,taxation "u ?is sub*apt]   
,su* income %all be subject to tax "u   
?is sub*apt] to ! same ext5t & 9 ! same 
mann] z if su* income 7 ! income ( a    
dome/ic insurance company4  7,d7        
,coord9ation ) =eign tax cr$it          
provisions ,= purposes ( subp>t ,a ( "p 
,,iii ( sub*apt] ,n & sections #gh &    
#ifj--  7i7 su* specifi$ re9surance     
income %all be treat$ z d]iv$ f s\rces  
)\t ! ,unit$ ,/ates1 &  7ii7 subsections
 7a71 7b71 & 7c7 ( section #ijd &       
sections #ijb1 #ijg1 & #ifj %all be     

appli$ sep>ately ) respect to ea* item (
 su* income4  ,! ,secret>y may issue    
regulations or o!r guidance :i* provide 
t relat$ items ( specifi$ re9surance    
income may be aggregat$ = purposes (    
apply+ clause 7ii74  7#c7 ,specifi$     
affiliat$ corporation ,= purposes ( ?is 
subsection1 ! t]m specifi$ affiliat$    
corporation means any affiliat$         
corporation :i* is a =eign corporation &
 :i* meets su* requirem5ts z ! ,secret>y
 %all prescribe to ensure t tax on !    
specifi$ re9surance income ( su*        
corporation is prop]ly det]m9$ & paid4  
7#d7 ,specifi$ re9surance income ,=     
purposes ( ?is p>agraph1 ! t]m specifi$ 
re9surance income means all income ( a  
specifi$ affiliat$ corporation :i* is   
attributable to re9surance ) respect to 
:i* subsection 7a7 w\ld 7b = ! election 
"u ?is subsection7 apply4  7#e7 ,rules  
relat$ to election ,any election "u     
p>agraph 7#a7 %all--  7,a7 be made at   
su* "t & 9 su* =m & mann] z ! ,secret>y 
may provide1 &  7,b7 apply = ! taxable  

ye> = :i* made & all subsequ5t taxable  
ye>s unless revok$ ) ! cons5t ( !       
,secret>y4  7e7 ,regulations ,!         
,secret>y %all prescribe su* regulations
 or o!r guidance z may be appropriate to
 c>ry out1 or to prev5t ! avoidance ( ! 
purposes (1 ?is section1 includ+        
regulations or o!r guidance :i* provide 
= ! application ( ?is section to        
alt]native re9surance transactions1     
front+ transactions1 conduit &          
reciprocal transactions1 & any          
economically equival5t transactions4  4 
7b7 ,cl]ical am5dm5t ,! table ( sections
 = "p ,,iii ( sub*apt] ,l ( *apt] #a (  
su* ,code is am5d$ by add+ at ! end !   
foll[+ new item3  ,sec4 #hdi4 ,special  
rules = re9surance ( non-life contracts 
) non-tax$ affiliates4  4  7c7          
,effective date ,! am5dm5t made by ?is  
section %all apply to taxable ye>s      
beg9n+ aft] ,decemb] #ca1 #bjac4