1. Short title
This Act may be cited as the “Insurance Company Tax Modernization and Parity Act of 2017”.
Insurance Company Tax Modernization and Parity Act of 2017
A BILL
To amend the Internal Revenue Code of 1986 to permit the consolidation of life insurance companies with other companies.
2. Consolidation of life insurance companies with other companies permitted
In general— Section 1504(b) of the Internal Revenue Code of 1986 is amended by striking paragraph (2) and by redesignating paragraphs (3) through (8) as paragraphs (2) through (7), respectively.
Conforming amendments—
Section 1503 of the Internal Revenue Code of 1986 is amended by striking subsection (c) and by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively.
Section 1504 of such Code is amended by striking subsection (c) and by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively.
Section 243(b)(2)(A) of such Code is amended by striking “sections 1504(b)(2), 1504(b)(4), and 1504(c)” and inserting “section 1504(b)(3)”.
Section 805(a)(4)(E) of such Code is amended by striking “1504(b)(3)” and inserting “1504(b)(2)”.
Section 818(e)(1) of such Code is amended to read as follows:
“(1) Items of companies other than insurance companies—If an affiliated group includes members which are and which are not taxed under section 801, all items of the members of such group which are not taxed under section 801 shall not be taken into account in determining the amount of the tentative LICTI of members of such group which are taxed under section 801.”
Section 832(b)(5)(D)(ii)(II) of such Code is amended by striking “1504(b)(3)” and inserting “1504(b)(2)”.
Section 864(e)(5)(A) of such Code is amended by striking “paragraph (4)” and inserting “paragraph (3)”.
Section 936(i)(5)(A) of such Code is amended by striking “section 1504(b)(3) or (4)” and inserting “section 1504(b)(2) or (3)”.
Section 952(c)(1)(B)(vii)(II) of such Code is amended by striking “1504(b)(3)” and inserting “1504(b)(2)”.
Section 953(d)(3) of such Code is amended by striking “1503(d)” and inserting “1503(c)”.
Section 954(h)(4)(F)(ii) of such Code is amended by striking “1504(b)(3)” and inserting “1504(b)(2)”.
Section 6166(b)(10)(B)(ii)(V) of such Code is amended by striking “1504(b)(3)” and inserting “1504(b)(2)”.
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2017.
3. Phase-in of application of certain losses against income of insurance companies
Phase-In—
In general— For taxable years beginning after December 31, 2017, and before January 1, 2024, if—
an affiliated group includes one or more domestic insurance companies subject to tax under section 801 of the Internal Revenue Code of 1986; and
the consolidated taxable income of the members of the group not taxed under such section 801 results in a consolidated net operating loss for such taxable year,
Applicable percentage— For purposes of paragraph (1), the applicable percentage shall be determined in accordance with the following table:
No carryback before January 1, 2018— To the extent that a consolidated net operating loss is allowed or increased by reason of this section or the amendments made by this Act, such loss (or increase in such loss, as the case may be) may not be carried back to a taxable year beginning before January 1, 2018.
Nontermination of group— No affiliated group shall terminate solely as a result of this section or the amendments made by this Act.
Subsidiary stock basis adjustments— A member corporation’s basis in the stock of a subsidiary corporation shall be adjusted upon consolidation to reflect the preconsolidation income, gain, deduction, loss, distributions, and other relevant amounts during a period when such corporations were members of an affiliated group (determined without regard to section 1504(b)(2) of the Internal Revenue Code of 1986 as in effect on the day before the date of enactment of this Act) but were not included in a consolidated return of such group by operation of section 1504(c)(2)(A) of such Code (as in effect on the day before the date of the enactment of this Act).
Waiver of 5-Year waiting period— An automatic waiver from the 5-year waiting period for reconsolidation provided in section 1504(a)(3) of the Internal Revenue Code of 1986 shall be granted to any corporation which was previously an includible corporation but was subsequently deemed a nonincludible corporation as a result of becoming a subsidiary of a corporation which was not an includible corporation solely by operation of section 1504(c)(2) of such Code (as in effect on the day before the date of enactment of this Act), subject to such conditions as the Secretary may prescribe.