,,ii #aaith ,,congress #ast ,session ,s4 #aihg ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,june #i1 #bjbe,mr4 ,cassidy 7for himself and ,mr4 ,marshall7 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 provide special rules for purposes of determining if financial guaranty insurance companies are qualifying insurance corporations under the passive foreign investment company rules4 #a4 ,treatment of financial guaranty insurance companies as qualifying insurance corporations under passive foreign investment company rules 7a7 ,in general ,section #abig7;f77#c7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,c7 ,special rules for financial guaranty insurance companies 7i7 ,in general ,notwithstanding subparagraphs 7,a77ii7 and 7,b71 the applicable insurance liabilities of a financial guaranty insurance company shall include its unearned premium reserves if-- 7,i7 such company is prohibited under generally accepted accounting principles from reporting on its applicable financial statements reserves for losses and loss adjustment expenses with respect to a financial guaranty insurance or reinsurance contract except to the extent that losses and loss adjustment expenses are expected to exceed the unearned premium reserves on the contract1 7,,ii7 the applicable financial statement of such company reports financial guaranty exposure of at least #ae-to-#a or ,state or local bond exposure of at least #i-to-#a1 and 7,,iii7 such company includes in its insurance liabilities only its unearned premium reserves relating to insurance written or assumed that is within the single risk limits set forth in subsection 7,d7 of section #d of the ,financial ,guaranty ,insurance ,guideline 7modified by using total shareholder's equity as reported on the applicable financial statement of the company rather than aggregate of the surplus to policyholders and contingency reserves74 7ii7 ,application of alternative facts and circumstances test ,a financial guaranty insurance company shall be treated as satisfying the requirements of paragraph 7#b77;,b74 7iii7 ,financial guaranty insurance company ,for purposes of this subparagraph1 the term financial guaranty insurance company means any insurance company the sole business of which is writing or reinsuring financial guaranty insurance 7as defined in subsection 7,a7 of section #a of the ,financial ,guaranty ,insurance ,guideline7 which is permitted under subsection 7,b7 of section #d of such ,guideline4 7iv7 ,financial guaranty exposure ,for purposes of this subparagraph1 the term financial guaranty exposure means the ratio of-- 7,i7 the net debt service outstanding insured or reinsured by the company that is within the single risk limits set forth in the ,financial ,guaranty ,insurance ,guideline 7as reported on such company's applicable financial statement71 to 7,,ii7 the company's total assets 7as so reported74 7v7 ,state or local bond exposure ,for purposes of this subparagraph1 the term ,state or local bond exposure means the ratio of-- 7,i7 the net unpaid principal of ,state or local bonds 7as defined in section #ajc7;c77#a77 insured or reinsured by the company that is within the single risk limits set forth in the ,financial ,guaranty ,insurance ,guideline 7as reported on such company's applicable financial statement71 to 7,,ii7 the company's total assets 7as so reported74 7vi7 ,financial ,guaranty ,insurance ,guideline ,for purposes of this subparagraph-- 7,i7 ,in general ,the term ,financial ,guaranty ,insurance ,guideline means the ,october #bjjh model regulation that was adopted by the ,national ,association of ,insurance ,commissioners on ,december #d1 #bjjg4 7,,ii7 ,determinations made by ,secretary ,the determination of whether any provision of the ,financial ,guaranty ,insurance ,guideline has been satisfied shall be made by the ,secretary4 4 7b7 ,reporting of certain items ,section #abig7;f77#d7 of such ,code is amended by adding at the end the following new subparagraph3 7,c7 ,clarification that certain items on applicable financial statement be separately reported with respect to corporation ,an amount described in paragraph 7#a77;,b7 or clause 7i77,,ii71 7i77,,iii71 7iv77,i71 7iv77,,ii71 7v77,i71 or 7v77,,ii7 of paragraph 7#c77;,c7 shall be treated as reported on an applicable financial statement for purposes of this section if-- 7i7 such amount is separately reported on such statement with respect to the corporation referred to in paragraph 7#a71 or 7ii7 such amount is separately determined for purposes of calculating an amount which is reported on such statement4 7,d7 ,authority of ,secretary to require reporting 7i7 ,in general ,each ,united ,states person who owns an interest in a specified non-publicly traded foreign corporation and who takes the position that such corporation is not a passive foreign investment company shall report to the ,secretary such information with respect to such corporation as the ,secretary may require4 7ii7 ,specified non-publicly traded foreign corporation ,for purposes of this subparagraph1 the term specified non-publicly traded foreign corporation means any foreign corporation-- 7,i7 which would be a passive foreign investment company if subsection 7b77#b77;,b7 did not apply1 and 7,,ii7 no interest in which is traded on an established securities market4 4 7c7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbd4 7#b7 ,reporting ,the amendment made by subsection 7b7 shall apply to reports made after ,december #ca1 #bjbd4 7#c7 ,certain financial guarantee insurance companies not treated as passive foreign investment companies merely by reason of status in certain prior taxable years 7,a7 ,in general ,in the case of any taxable year of a qualified financial guarantee insurance company beginning after ,december #ca1 #bjbd1 section #abih7;b77#a7 of the ,internal ,revenue ,code of #aihf shall be applied to stock held by any taxpayer in such company by treating the specified grace period with respect to such company as not part of such taxpayer's holding period of such stock4 7,b7 ,qualified financial guarantee insurance company ,for purposes of this paragraph1 the term qualified financial guarantee insurance company means any financial guarantee insurance company 7as defined in subparagraph 7,c7 of section #abig7;f77#c7 of the ,internal ,revenue ,code of #aihf1 as added by this section7 which would not be a passive foreign investment company if-- 7i7 such subparagraph applied to the specified grace period1 and 7ii7 in the case of any taxable year ending before ,january #a1 #bjai1 clause 7i77,,ii7 of such subparagraph were applied by substituting #h-to-#a for #i-to-#a4 7,c7 ,specified grace period ,for purposes of this paragraph1 the term specified grace period means1 with respect to any financial guarantee insurance company1 the period beginning with such company's first taxable year beginning after ,december #ca1 #bjag1 and ending with such company's last taxable year beginning before ,january #a1 #bjbe4 7,d7 ,regulations and other guidance ,the ,secretary of the ,treasury 7or the ,secretary's delegate7 shall issue such regulations or other guidance as may be necessary or appropriate to provide for the proper treatment of any financial guarantee insurance company which ceases to be treated as a passive foreign investment company by reason of subparagraph 7,a71 including regulations or other guidance which provide for-- 7i7 an opportunity for the revocation of any election made under section #abie7;b7 or #abif7k7 of the ,internal ,revenue ,code of #aihf1 and 7ii7 the application of section #abic7;c7 of such ,code to periods after such company ceases to be treated as a passive foreign investment company4