,,ii  #aadth ,,congress  #ast ,session  
,s4 #afhg  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,june #be1     
#bjae,mr4 ,wyden introduced the         
following bill2 which was read twice and
 referred to the ,committee on ,finance 
,a ,,bill  ,to amend the ,internal      
,revenue ,code of #aihf to restrict the 
insurance business exception to passive 
foreign investment company rules4  #a4  
,short title ,this ,act may be cited as 
the ,offshore ,reinsurance ,tax         
,fairness ,act4  #b4 ,restriction on    
insurance business exception to passive 
foreign investment company rules  7a7   
,in general ,section #abig7;b77#b77;,b7 
of the ,internal ,revenue ,code of #aihf
 is amended to read as follows3  7,b7   
derived in the active conduct of an     
insurance business by a qualifying      
insurance corporation 7as defined in    
subsection 7f771  4  7b7 ,qualifying    
insurance corporation defined ,section  
#abig of the ,internal ,revenue ,code of
 #aihf is amended by adding at the end  

the following new subsection3  7f7      
,qualifying insurance corporation ,for  
purposes of subsection 7b77#b77;,b7--   
7#a7 ,in general ,the term qualifying   
insurance corporation means1 with       
respect to any taxable year1 a foreign  
corporation--  7,a7 which would be      
subject to tax under subchapter ,l if   
such corporation were a domestic        
corporation1 and  7,b7 the applicable   
insurance liabilities of which          
constitute more than #be percent of its 
total assets1 determined on the basis of
 such liabilities and assets as reported
 on the corporation's applicable        
financial statement for the last year   
ending with or within the taxable year4 
7#b7 ,alternative facts and             
circumstances test for certain          
corporations ,if a corporation fails to 
qualify as a qualified insurance        
corporation under paragraph 7#a7 solely 
because the percentage determined under 
paragraph 7#a77;,b7 is #be percent or   
less1 a ,united ,states person that owns

 stock in such corporation may elect to 
treat such stock as stock of a          
qualifying insurance corporation if--   
7,a7 the percentage so determined for   
the corporation is at least #aj percent1
 and  7,b7 under regulations provided by
 the ,secretary1 based on the applicable
 facts and circumstances--  7i7 the     
corporation is predominantly engaged in 
an insurance business1 and  7ii7 such   
failure is due solely to temporary      
circumstances involving such insurance  
business4  7#c7 ,applicable insurance   
liabilities ,for purposes of this       
subsection-- 7,a7 ,in general ,the term 
applicable insurance liabilities means1 
with respect to any life or property and
 casualty insurance business--  7i7 loss
 and loss adjustment expenses1 and  7ii7
 reserves 7other than deficiency1       
contingency1 or unearned premium        
reserves7 for life and health insurance 
risks and life and health insurance     
claims with respect to contracts        
providing coverage for mortality or     

morbidity risks4  7,b7 ,limitations on  
amount of liabilities ,any amount       
determined under clause 7i7 or 7ii7 of  
subparagraph 7,a7 shall not exceed the  
lesser of such amount--  7i7 as reported
 to the applicable insurance regulatory 
body in the applicable financial        
statement described in paragraph        
7#d77;,a7 7or1 if less1 the amount      
required by applicable law or           
regulation71 or  7ii7 as determined     
under regulations prescribed by the     
,secretary4  7#d7 ,other definitions and
 rules ,for purposes of this            
subsection--  7,a7 ,applicable financial
 statement ,the term applicable         
financial statement means a statement   
for financial reporting purposes which--
 7i7 is made on the basis of generally  
accepted accounting principles1  7ii7 is
 made on the basis of international     
financial reporting standards1 but only 
if there is no statement that meets the 
requirement of clause 7i71 or  7iii7    
except as otherwise provided by the     

,secretary in regulations1 is the annual
 statement which is required to be filed
 with the applicable insurance          
regulatory body1 but only if there is no
 statement which meets the requirements 
of clause 7i7 or 7ii74  7,b7 ,applicable
 insurance regulatory body ,the term    
applicable insurance regulatory body    
means1 with respect to any insurance    
business1 the entity established by law 
to license1 authorize1 or regulate such 
business and to which the statement     
described in subparagraph 7,a7 is       
provided4  4  7c7 ,effective date ,the  
amendments made by this section shall   
apply to taxable years beginning after  
,december #ca1 #bjae4