prorated amounts

(iii)For purposes of this subparagraph, the term “prorated amounts” means tax-exempt interest, the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to whichapplies, and dividends other than 100 percent dividends. (iv)For 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, 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)Rules similar to the rules of this subsection shall apply in the case of 100 percent dividends paid by an insurance company which is not a life insurance company. (E)Subparagraph (A)(i) (and not subparagraph (A)(ii)) shall apply to any dividend received by a foreign corporation from a domestic corporation which would be a 100 percent dividend ifdid not apply for purposes of applying section 243(b)(2). (F)For purposes of subparagraphs (C) and (D)— (i)The 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 whichapplies.

Source

26 USC § 805(a)(4)(D)(iii)


Scoping language

For purposes of this subparagraph
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