2017—Subsec. (c)(2). Pub. L. 115–97, § 13523(a), amended par. (2) generally. Prior to amendment, text read as follows:
“(A) In general.—The annual rate determined by the Secretary under this paragraph for any calendar year shall be a rate equal to the average of the applicable Federal mid-term rates (as defined in section 1274(d) but based on annual compounding) effective as of the beginning of each of the calendar months in the test period.
“(B) Test period.—For purposes of subparagraph (A), the test period is the most recent 60-calendar-month period ending before the beginning of the calendar year for which the determination is made; except that there shall be excluded from the test period any month beginning before August 1, 1986.”
Subsec. (d)(3)(B) to (G). Pub. L. 115–97, § 13523(b), added subpar. (B) and struck out former subpars. (B) to (G) which related to treatment of certain losses, special rule for certain long-tail lines, long-tail line of business, special rule for international and reinsurance lines of business, adjustments if loss experience information available for longer periods, and special rule for 9th year if negative or zero, respectively.
Subsecs. (e), (f). Pub. L. 115–97, § 13523(c), redesignated subsecs. (f) and (g) as (e) and (f), respectively, and struck out former subsec. (e) which related to election to use company’s historical payment pattern.
Subsec. (f)(6)(A). Pub. L. 115–97, § 13517(b)(3), substituted “except that the limitation of subsection (a)(3) shall apply, and” for “except that—
“(i) the prevailing State assumed interest rate shall be the rate in effect for the year in which the loss occurred rather than the year in which the contract was issued, and
“(ii) the limitation of subsection (a)(3) shall apply in lieu of the limitation of the last sentence of section 807(d)(1), and”.
Subsec. (g). Pub. L. 115–97, § 13523(c), redesignated subsec. (g) as (f).
1990—Subsec. (g). Pub. L. 101–508 inserted “and” at end of par. (1), redesignated par. (3) as (2), and struck out former par. (2) which required regulations providing proper treatment of salvage and reinsurance recoverable attributable to unpaid losses.
1988—Subsec. (f)(6)(B). Pub. L. 100–647, § 1010(e)(1), substituted “paid in the middle of the year” for “paid during the year”.
Subsec. (g)(3). Pub. L. 100–647, § 1010(e)(2), added par. (3).
Effective Date of 2017 Amendment
Amendment by section 13517(b)(3) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, with transition rule and transition relief, see section 13517(c) of Pub. L. 115–97, set out as a note under section 807 of this title.
Pub. L. 115–97, title I, § 13523(d), Dec. 22, 2017, 131 Stat. 2152, provided that:
“The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017.”
Pub. L. 99–514, title X, § 1023(e), Oct. 22, 1986, 100 Stat. 2404, as amended by Pub. L. 100–647, title I, § 1010(e)(3), Nov. 10, 1988, 102 Stat. 3453, provided that:
“(1) In general.—
The amendments made by this section [enacting this section and amending sections 807
of this title] shall apply to taxable years beginning after December 31, 1986
“(2) Transitional rule.—For the first taxable year beginning after December 31, 1986—
the unpaid losses
as defined in sections 807(c)(2) and 805(a)(1) of such Code at the end of the preceding taxable year,
shall be determined as if the amendments made by this section had applied to such unpaid losses
and expenses unpaid
in the preceding taxable year and by using the interest rate and loss payment patterns applicable to accident years
ending with calendar year 1987. For subsequent taxable years, such amendments shall be applied with respect to such unpaid losses
and expenses unpaid
by using the interest rate and loss payment patterns applicable to accident years
ending with calendar year 1987.
“(3) Fresh start.—
“(A) In general.—Except as otherwise provided in this paragraph, any difference between—
the amount determined to be the unpaid losses
and expenses unpaid
for the year preceding the 1st taxable year of an insurance company beginning after December 31, 1986
, determined without regard to paragraph (2), and
such amount determined with regard to paragraph (2),
“(B) Reserve strengthening in years after 1985.—
Subparagraph (A) shall not apply to any reserve strengthening in a taxable year beginning in 1986, and such strengthening shall be treated as occurring in the taxpayer’s 1st taxable year beginning after December 31, 1986.
“(C) Effect on earnings and profits.—
The earnings and profits of any insurance company for its 1st taxable year beginning after December 31, 1986, shall be increased by the amount of the difference determined under subparagraph (A) with respect to such company.
“(4) Application of fresh start to companies which become subject to section 831(a) tax in later taxable year.—If—
“(A) an insurance company was not subject to tax under section 831(a) of the Internal Revenue Code of 1986 for its 1st taxable year beginning after December 31, 1986, by reason of being—
subject to tax under section 831(b) of such Code, or
described in section 501(c) of such Code and exempt from tax under section 501(a) of such Code, and
such company becomes subject to tax under such section 831(a)
for any later taxable year,
paragraph (2) and subparagraphs (A) and (C) of paragraph (3) shall be applied by treating such later taxable year as its 1st taxable year beginning after December 31, 1986, and by treating the calendar year in which such later taxable year begins as 1987; and paragraph (3)(B) shall not apply.”