TREATMENT OF CERTAIN NONLIFE RESERVES OF LIFE INSURANCE COMPANIES.

SEC. 11302. TREATMENT OF CERTAIN NONLIFE RESERVES OF LIFE INSURANCE COMPANIES. (a) General Rule.— Subsection (e) of section 807 (relating to special rules for computing reserves) is amended by adding at the end thereof the following new paragraph: “(7) Special rules for treatment of certain nonlife reserves.— 104 STAT. 1388–450 “(A) In general.— The amount taken into account for purposes of subsections (a) and (b) as— “(i) the opening balance of the items referred to in subparagraph (C), and “(ii) the closing balance of such items, shall be 80 percent of the amount which (without regard to this subparagraph) would have been taken into account as such opening or closing balance, as the case may be. “(B) Transitional rule.— “(i) In general.— In the case of any taxable year beginning on or after September 30, 1990, and before September 30, 1996, there shall be included in the gross income of any life insurance company an amount equal to 3 1/3 percent of such company’s closing balance of the items referred to in subparagraph (C) for its most recent taxable year beginning before September 30, 1990. “(ii) Termination as ufe insurance company.— Except as provided in section 381(c)(22), if, for any taxable year beginning on or before September 30, 1996, the taxpayer ceases to be a life insurance company, the aggregate inclusions which would have been made under clause (i) for such taxable year and subsequent taxable years but for such cessation shall be taken into account for the taxable year preceding such cessation year. “(C) Description of items.— For purposes of this paragraph, the items referred to in this subparagraph are the items described in subsection (c) which consist of unearned premiums and premiums received in advance under insurance contracts not described in section 816(b)(l)(B).” (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years beginning on or after September 30, 1990.