{
  "id": "RL32180",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "RL32180",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 104206,
      "date": "2003-12-24",
      "retrieved": "2016-04-08T14:31:44.236544",
      "title": "Taxation of Life Insurance Companies",
      "summary": "Life insurance companies determine their federal income tax liability using a set of Internal\nRevenue\nCode provisions that apply only to those companies. This report provides an overview of these tax\nprovisions. \n  Life insurance companies sell financial contracts that contain two common features. First, these\ncontracts generally provide protection against uncertain financial risks that relate to the timing of the\ndeath of insured individuals. Second, they incorporate a broad variety of financial investment\narrangements. Most of the difficult issues that arise concerning the taxation of life insurance\ncompanies relate to these two economic components of life insurance arrangements. This report\ncontains a very brief overview of these business activities of life insurance companies. \n  The report then provides a brief history of the federal income tax treatment of life insurance\ncompanies. Prior to 1984, when Congress enacted the current tax provisions, life insurance\ncompanies were taxed in a manner that reflected two major policy decisions. First, a significant\ncomponent of life insurance company profits was untaxed. Second, Congress sought to achieve an\n\"acceptable\" balance between the tax burden borne by life insurance companies owned by their\nshareholders and the mutual life insurance companies that were owned by their policyholders. These\nprovisions of prior law led Congress to enact Internal Revenue Code Sections 809 and 815, which\nhave attracted legislative attention in recent years, which are discussed in this report.\n  Next, the current tax provisions applicable to life insurance companies, including an overview\nof the general approach to taxation, are examined. In general, life insurance companies include all\nof their receipts in income and may deduct their general business expenses. In addition, specialized\nprovisions that apply to insurance companies make certain that these companies are not overtaxed\nas compared to other financial intermediaries. These specialized provisions are discussed,\nspecifically: \n  (1) the special deductions for \"small\" life insurance companies that effectively reduce the tax\nrate applicable to these companies from 35% to 14%; \n  (2) the limitation enacted to prevent life insurance companies from deducting inappropriate\nexpenses that are attributable to generating tax-exempt income; \n  (3) the complex provisions that govern the deductions allowed with respect to a life insurance\ncompany's reserve liabilities; and \n  (4) the limitation on the amount of policyholder dividends that mutual life insurance\ncompanies are allowed to deduct.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
      "formats": [
        {
          "format": "PDF",
          "encoding": null,
          "url": "http://www.crs.gov/Reports/pdf/RL32180",
          "sha1": "efb547511b5c80efce5336edce1dc09c07b887c2",
          "filename": "files/20031224_RL32180_efb547511b5c80efce5336edce1dc09c07b887c2.pdf",
          "images": null
        },
        {
          "format": "HTML",
          "filename": "files/20031224_RL32180_efb547511b5c80efce5336edce1dc09c07b887c2.html"
        }
      ],
      "topics": []
    }
  ],
  "topics": [
    "Economic Policy"
  ]
}