§ 818. Other definitions and special rules
(a)
Pension plan contracts
For purposes of this part, the term “pension plan contract” means any contract—
(1)
entered into with trusts which (as of the time the contracts were entered into) were deemed to be trusts described in section
401
(a) and exempt from tax under section
501
(a) (or trusts exempt from tax under section 165 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws);
(2)
entered into under plans which (as of the time the contracts were entered into) were deemed to be plans described in section
403
(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939;
(3)
provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (17), (19), (20), (22), (26), and (27) of section
401
(a);
(4)
purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section
501
(c)(3) which was exempt from tax under section
501
(a) (or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws), or purchased to provide retirement annuities for employees described in section
403
(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing;
(5)
entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section
408
(a) or under contracts entered into with individual retirement annuities described in section
408
(b); or
(6)
purchased by—
(A)
a governmental plan (within the meaning of section
414
(d)) or an eligible deferred compensation plan (within the meaning of section
457
(b)), or
(B)
the Government of the United States, the government of any State or political subdivision thereof, or by any agency or instrumentality of the foregoing, or any organization (other than a governmental unit) exempt from tax under this subtitle, for use in satisfying an obligation of such government, political subdivision, agency or instrumentality, or organization to provide a benefit under a plan described in subparagraph (A).
(b)
Treatment of capital gains and losses, etc.
In the case of a life insurance company—
(1)
in applying section
1231
(a), the term “property used in the trade or business” shall be treated as including only—
(A)
property used in carrying on an insurance business, of a character which is subject to the allowance for depreciation provided in section
167, held for more than 1 year, and real property used in carrying on an insurance business, held for more than 1 year, which is not described in section
1231
(b)(1)(A), (B), or (C), and
(c)
Gain on property held on December 31, 1958 and certain substituted property acquired after 1958
(1)
Property held on December 31, 1958
In the case of property held by the taxpayer on December 31, 1958, if—
(A)
the fair market value of such property on such date exceeds the adjusted basis for determining gain as of such date, and
the gain on the sale or other disposition of such property shall be treated as an amount (not less than zero) equal to the amount by which the gain (determined without regard to this subsection) exceeds the difference between the fair market value on December 31, 1958, and the adjusted basis for determining gain as of such date.
(2)
Certain property acquired after December 31, 1958
In the case of property acquired after December 31, 1958, and having a substituted basis (within the meaning of section
1016
(b))—
(A)
for purposes of paragraph (1), such property shall be deemed held continuously by the taxpayer since the beginning of the holding period thereof, determined with reference to section
1223,
(B)
the fair market value and adjusted basis referred to in paragraph (1) shall be that of that property for which the holding period taken into account includes December 31, 1958,
(C)
paragraph (1) shall apply only if the property or properties the holding periods of which are taken into account were held only by life insurance companies after December 31, 1958, during the holding periods so taken into account,
(D)
the difference between the fair market value and adjusted basis referred to in paragraph (1) shall be reduced (to not less than zero) by the excess of
(i)
the gain that would have been recognized but for this subsection on all prior sales or dispositions after December 31, 1958, of properties referred to in subparagraph (C), over
(d)
Insurance or annuity contract includes contracts supplementary thereto
For purposes of this part, the term “insurance or annuity contract” includes any contract supplementary thereto.
(e)
Special rules for consolidated returns
(1)
Items of companies other than life insurance companies
If an election under section
1504
(c)(2) is in effect with respect to an affiliated group for the taxable year, all items of the members of such group which are not life insurance companies shall not be taken into account in determining the amount of the tentative LICTI of members of such group which are life insurance companies.
(2)
Dividends within group
In the case of a life insurance company filing or required to file a consolidated return under section
1501 with respect to any affiliated group for any taxable year, any determination under this part with respect to any dividend paid by one member of such group to another member of such group shall be made as if such group was not filing a consolidated return.
(f)
Allocation of certain items for purposes of foreign tax credit, etc.
(1)
In general
Under regulations, in applying sections
861,
862, and
863 to a life insurance company, the deduction for policyholder dividends (determined under section
808
(c)), reserve adjustments under subsections (a) and (b) of section
807, and death benefits and other amounts described in section
805
(a)(1) shall be treated as items which cannot definitely be allocated to an item or class of gross income.
(g)
Qualified accelerated death benefit riders treated as life insurance
For purposes of this part—
(1)
In general
Any reference to a life insurance contract shall be treated as including a reference to a qualified accelerated death benefit rider on such contract.
(3)
Exception for long-term care riders
Paragraph (1) shall not apply to any rider which is treated as a long-term care insurance contract under section
7702B.