View all text of Subpart C [§ 804 - § 810]
§ 805. General deductions
(a) General ruleFor purposes of this part, there shall be allowed the following deductions:
(1) Death benefits, etc.
(2) Increases in certain reserves
(3) Policyholder dividends
(4) Dividends received by company
(A) In generalThe deductions provided by sections 243 and 245 (as modified by subparagraph (B))—
(i) for 100 percent dividends received, and
(ii) for the life insurance company’s share of the dividends (other than 100 percent dividends) received.
(B) Application of section 246(b)In applying section 246(b) (relating to limitation on aggregate amount of deductions for dividends received) for purposes of subparagraph (A), the limit on the aggregate amount of the deductions allowed by sections 243(a)(1) and 245 shall be the percentage determined under section 246(b)(3) of the life insurance company taxable income (and such limitation shall be applied as provided in section 246(b)(3)), computed without regard to—
(i) the deduction allowed under section 172,
(ii) the deductions allowed by sections 243(a)(1) and 245, and
(iii) any capital loss carryback to the taxable year under section 1212(a)(1),
but such limit shall not apply for any taxable year for which there is a loss from operations.
(C) 100 percent dividendFor purposes of subparagraph (A)—
(i) In general
(ii) Treatment of dividends from noninsurance companies
(D) Special rules for certain dividends from insurance companies
(i) In generalIn the case of any 100 percent dividend paid to any life insurance company out of the earnings and profits for any taxable year beginning after December 31, 1983, of another life insurance company if—(I) the paying company’s share determined under section 812 for such taxable year, exceeds(II) the receiving company’s share determined under section 812 for its taxable year in which the dividend is received or accrued,
the deduction allowed under section 243 or 245(b) (as the case may be) shall be reduced as provided in clause (ii).
(ii) Amount of reductionThe reduction under this clause for a dividend is an amount equal to—(I) the portion of such dividend attributable to prorated amounts, multiplied by(II) the percentage obtained by subtracting the share described in subclause (II) of clause (i) from the share described in subclause (I) of such clause.
(iii) Prorated amounts
(iv) Portion of dividend attributable to prorated amountsFor purposes of this subparagraph, in determining the portion of any dividend attributable to prorated amounts—(I) any dividend by the paying corporation shall be treated as paid first out of earnings and profits for taxable years beginning after December 31, 1983, attributable to prorated amounts (to the extent thereof), and(II) by determining the portion of earnings and profits so attributable without any reduction for the tax imposed by this chapter.
(v) Subparagraph to apply to dividends from other insurance companies
(E) Certain dividends received by foreign corporations
(F) Increase in policy cash valuesFor purposes of subparagraphs (C) and (D)—
(i) In generalThe increase in the policy cash value for any taxable year with respect to policy or contract is the amount of the increase in the adjusted cash value during such taxable year determined without regard to—(I) gross premiums paid during such taxable year, and(II) distributions (other than amounts includible in the policyholder’s gross income) during such taxable year to which section 72(e) applies.
(ii) Adjusted cash valueFor purposes of clause (i), the term “adjusted cash value” means the cash surrender value of the policy or contract increased by the sum of—(I) commissions payable with respect to such policy or contract for the taxable year, and(II) asset management fees, surrender charges, mortality and expense charges, and any other fees or charges specified in regulations prescribed by the Secretary which are imposed (or which would be imposed were the policy or contract canceled) with respect to such policy or contract for the taxable year.
[(5) Repealed. Pub. L. 115–97, title I, § 13511(b)(5), Dec. 22, 2017, 131 Stat. 2142]
(6) Assumption by another person of liabilities under insurance, etc., contracts
(7) Reimbursable dividendsThe amount of policyholder dividends which—
(A) are paid or accrued by another insurance company in respect of policies the taxpayer has reinsured, and
(B) are reimbursable by the taxpayer under the terms of the reinsurance contract.
(8) Other deductions
Except as provided in paragraph (3), no amount shall be allowed as a deduction under this part in respect of policyholder dividends.
(b) ModificationsThe modifications referred to in subsection (a)(8) are as follows:
(1) Interest
(2) Charitable, etc., contributions and giftsIn applying section 170—
(A) the limit on the total deductions under such section provided by section 170(b)(2) shall be 10 percent of the life insurance company taxable income computed without regard to—
(i) the deduction provided by section 170,
(ii) the deductions provided by paragraphs (3) and (4) of subsection (a),
(iii) any net operating loss carryback to the taxable year under section 172, and
(iv) any capital loss carryback to the taxable year under section 1212(a)(1), and
(B) under regulations prescribed by the Secretary, a rule similar to the rule contained in section 170(d)(2)(B) (relating to special rule for net operating loss carryovers) shall be applied.
(3) Amortizable bond premium
(A) In general
(B) Cross reference
(4) Dividends received deduction
(Added Pub. L. 98–369, div. A, title II, § 211(a), July 18, 1984, 98 Stat. 722; amended Pub. L. 99–514, title VI, § 611(a)(5), title VIII, § 805(c)(6), title X, § 1011(b)(4), title XVIII, § 1821(p), Oct. 22, 1986, 100 Stat. 2249, 2362, 2389, 2842; Pub. L. 100–203, title X, § 10221(c)(2), Dec. 22, 1987, 101 Stat. 1330–409; Pub. L. 104–188, title I, § 1702(h)(3), Aug. 20, 1996, 110 Stat. 1873; Pub. L. 105–34, title X, § 1084(b)(1), Aug. 5, 1997, 111 Stat. 954; Pub. L. 113–295, div. A, title II, § 221(a)(41)(G), (I), Dec. 19, 2014, 128 Stat. 4044; Pub. L. 115–97, title I, §§ 13511(a), (b)(4)–(6), 13512(b)(5), (6), Dec. 22, 2017, 131 Stat. 2142, 2143.)