26 U.S.C. § 805
Section 805 · General deductions
Current version, with additions and removals from the August 5, 1997 version.
For purposes of this part, there shall be allowed the following deductions:
For purposes of this part, there shall be allowed the following deductions:
(1) Death benefits, etc.
(1) Death benefits, etc.
All claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts.
All claims and benefits accrued, and all losses incurred (whether or not ascertained), during the taxable year on insurance and annuity contracts.
(2) Increases in certain reserves
(2) Increases in certain reserves
The net increase in reserves which is required by section 807(b) to be taken into account under this paragraph.
The net increase in reserves which is required by section 807(b) to be taken into account under this paragraph.
(3) Policyholder dividends
(3) Policyholder dividends
The deduction for policyholder dividends (determined under section 808(c)).
The deduction for policyholder dividends (determined under section 808(c)).
(4) Dividends received by company
(4) Dividends received by company
(A) In general
(A) In general
(i) for 100 percent dividends received, and
(i) for 100 percent dividends received, and
(ii) for the life insurance company's share of the dividends (other than 100 percent dividends) received.
(ii) for the life insurance company's share of the dividends (other than 100 percent dividends) received.
(B) Application of section 246(b)
(B) Application of section 246(b)
(i) the small life insurance company deduction,
(ii) the operations loss deduction provided by section 810,
(i) the deduction allowed under section 172,
but such limit shall not apply for any taxable year for which there is a loss from operations.
but such limit shall not apply for any taxable year for which there is a loss from operations.
(C) 100 percent dividend
(C) 100 percent dividend
For purposes of subparagraph (A)—
For purposes of subparagraph (A)—
(i) In general
(i) In general
(ii) Treatment of dividends from noninsurance companies
(ii) Treatment of dividends from noninsurance companies
The term “100 percent dividend” does not include any distribution by a corporation which is not an insurance company to the extent such distribution is out of tax-exempt interest, or out of 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 which section 264(f) applies, or out of dividends which are not 100 percent dividends (determined with the application of this clause as if it applies to distributions by all corporations including insurance companies).
The term "100 percent dividend" does not include any distribution by a corporation which is not an insurance company to the extent such distribution is out of tax-exempt interest, or out of 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 which section 264(f) applies, or out of dividends which are not 100 percent dividends (determined with the application of this clause as if it applies to distributions by all corporations including insurance companies).
(D) Special rules for certain dividends from insurance companies
(D) Special rules for certain dividends from insurance companies
(i) In general
(i) In general
In 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—
In 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
(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,
(II) the receiving company's share determined under section 812 for its taxable year in which the dividend is received or accrued,
(ii) Amount of reduction
(ii) Amount of reduction
The reduction under this clause for a dividend is an amount equal to—
The reduction under this clause for a dividend is an amount equal to—
(I) the portion of such dividend attributable to prorated amounts, multiplied by
(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.
(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
(iii) Prorated amounts
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 which section 264(f) applies, and dividends other than 100 percent dividends.
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 which section 264(f) applies, and dividends other than 100 percent dividends.
(iv) Portion of dividend attributable to prorated amounts
(iv) Portion of dividend attributable to prorated amounts
For purposes of this subparagraph, in determining the portion of any dividend attributable to prorated amounts—
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 December 31, 1983, attributable to prorated amounts (to the extent thereof), and
(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.
(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
(v) Subparagraph to apply to dividends from other insurance companies
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.
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) Certain dividends received by foreign corporations
(E) Certain dividends received by foreign corporations
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 if section 1504(b)(3) did not apply for purposes of applying section 243(b)(2).
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 if section 1504(b)(3) did not apply for purposes of applying section 243(b)(2).
(F) Increase in policy cash values
(F) Increase in policy cash values
For purposes of subparagraphs (C) and (D)—
For purposes of subparagraphs (C) and (D)—
(i) In general
(i) In general
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—
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
(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) distributions (other than amounts includible in the policyholder's gross income) during such taxable year to which section 72(e) applies.
(ii) Adjusted cash value
(ii) Adjusted cash value
For purposes of clause (i), the term “adjusted cash value” means the cash surrender value of the policy or contract increased by the sum of—
For 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
(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.
(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) Operations loss deduction
The operations loss deduction (determined under section 810).
[(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
(6) Assumption by another person of liabilities under insurance, etc., contracts
The consideration (other than consideration arising out of indemnity reinsurance) in respect of the assumption by another person of liabilities under insurance and annuity contracts.
The consideration (other than consideration arising out of indemnity reinsurance) in respect of the assumption by another person of liabilities under insurance and annuity contracts.
(7) Reimbursable dividends
(7) Reimbursable dividends
The amount of policyholder dividends which—
The amount of policyholder dividends which—
(A) are paid or accrued by another insurance company in respect of policies the taxpayer has reinsured, and
(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.
(B) are reimbursable by the taxpayer under the terms of the reinsurance contract.
(8) Other deductions
(8) Other deductions
Subject to the modifications provided by subsection (b), all other deductions allowed under this subtitle for purposes of computing taxable income.
Subject to the modifications provided by subsection (b), all other deductions allowed under this subtitle for purposes of computing taxable income.
Except as provided in paragraph (3), no amount shall be allowed as a deduction under this part in respect of policyholder dividends.
Except as provided in paragraph (3), no amount shall be allowed as a deduction under this part in respect of policyholder dividends.
The modifications referred to in subsection (a)(8) are as follows:
The modifications referred to in subsection (a)(8) are as follows:
(1) Interest
(1) Interest
In applying section 163 (relating to deduction for interest), no deduction shall be allowed for interest in respect of items described in section 807(c).
In applying section 163 (relating to deduction for interest), no deduction shall be allowed for interest in respect of items described in section 807(c).
(2) Charitable, etc., contributions and gifts
(2) Charitable, etc., contributions and gifts
In applying section 170—
In 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—
(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,
(i) the deduction provided by section 170,
(ii) the deductions provided by paragraphs (3) and (4) of subsection (a),
(ii) the deductions provided by paragraphs (3) and (4) of subsection (a),
(iii) the small life insurance company deduction,
(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.
(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
(3) Amortizable bond premium
(A) In general
(A) In general
Section 171 shall not apply.
Section 171 shall not apply.
(B) Cross reference
(B) Cross reference
For rules relating to amortizable bond premium, see section 811(b).
For rules relating to amortizable bond premium, see section 811(b).
(4) Net operating loss deduction
Except as provided by section 844, the deduction for net operating losses provided in section 172 shall not be allowed.