§7702. Life insurance contract defined — Inbound Citations
26 U.S.C. § 7702
Cited by 108 provisions in release 119-102.
Citations to 26 U.S.C. § 7702 as a whole
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(I) it would be treated as a life insurance contract under section 7702 of title 26; or
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(A) For purposes of this subsection, the term “employer-owned life insurance contract” means a life insurance contract which—(i) is owned by a person engaged in a trade or business and under which such person (or a related person described in subparagraph (B)(ii)) is directly or indirectly a beneficiary under the contract, and(ii) covers the life of an insured who is an employee with respect to the trade or business of the applicable policyholder on the date the contract is issued.
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(E) If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term “master contract” shall not include any group life insurance contract (as defined in section 848(e)(2)).
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(1) to provide for the treatment of market value adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B),
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(5) For purposes of this section and section 954, the determination of whether a contract issued by a controlled foreign corporation or a qualified business unit (within the meaning of section 989(a)) is a life insurance contract or an annuity contract shall be made without regard to sections 72(s), 101(f), 817(h), and 7702 if—(A) such contract is regulated as a life insurance or annuity contract by the corporation’s or unit’s home country, and(B) no policyholder, insured, annuitant, or beneficiary with respect to the contract is a United States person.
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(a) For purposes of section 72, the term “modified endowment contract” means any contract meeting the requirements of section 7702—(1) which—(A) is entered into on or after June 21, 1988, and(B) fails to meet the 7-pay test of subsection (b), or(2) which is received in exchange for a contract described in paragraph (1) or this paragraph.
Citations to §7702(a)
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(1) For purposes of subchapter L, section 72 (relating to annuities), and section 7702(a) (relating to definition of life insurance contract), a variable contract (other than a pension plan contract) which is otherwise described in this section and which is based on a segregated asset account shall not be treated as an annuity, endowment, or life insurance contract for any period (and any subsequent period) for which the investments made by such account are not, in accordance with regulations prescribed by the Secretary, adequately diversified.
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(4) For provisions requiring reporting of information relating to certain life insurance contract transactions, see section 6050Y.
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(a) Any person who makes a charge against the cash value of an annuity contract, or the cash surrender value of a life insurance contract, which is excludible from gross income under section 72(e)(11) shall make a return, according to the forms or regulations prescribed by the Secretary, setting forth—(1) the amount of the aggregate of such charges against each such contract for the calendar year,(2) the amount of the reduction in the investment in each such contract by reason of such charges, and
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(1) Every person who acquires a life insurance contract or any interest in a life insurance contract in a reportable policy sale during any taxable year shall make a return for such taxable year (at such time and in such manner as the Secretary shall prescribe) setting forth—(B) the name, address, and TIN of each recipient of payment in the reportable policy sale,(C) the date of such sale,(D) the name of the issuer of the life insurance contract sold and the policy number of such contract, and(E) the amount of each payment.
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(D) the name of the issuer of the life insurance contract sold and the policy number of such contract, and
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(B) the information required to be shown on such return with respect to such person, except that in the case of an issuer of a life insurance contract, such statement is not required to include the information specified in paragraph (1)(E).
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(1) Upon receipt of the statement required under subsection (a)(2) or upon notice of a transfer of a life insurance contract to a foreign person, each issuer of a life insurance contract shall make a return (at such time and in such manner as the Secretary shall prescribe) setting forth—(A) the name, address, and TIN of the seller who transfers any interest in such contract in such sale,(B) the investment in the contract (as defined in section 72(e)(6)) with respect to such seller, and(C) the policy number of such contract.
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(3) The term “issuer” means any life insurance company that bears the risk with respect to a life insurance contract on the date any return or statement is required to be made under this section.
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(4) The term “reportable death benefits” means amounts paid by reason of the death of the insured under a life insurance contract that has been transferred in a reportable policy sale.
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(xxvi) section 6050Y (relating to returns relating to certain life insurance contract transactions),
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(KK) subsection (a)(2), (b)(2), or (c)(2) of section 6050Y (relating to returns relating to certain life insurance contract transactions),
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(e) Except as otherwise provided in regulations prescribed by the Secretary, in the case of any long-term care insurance coverage (whether or not qualified) provided by a rider on or as part of a life insurance contract or an annuity contract—(1) This title shall apply as if the portion of the contract providing such coverage is a separate contract.(2) No deduction shall be allowed under section 213(a) for any payment made for coverage under a qualified long-term care insurance contract if such payment is made as a charge against the cash surrender value of a life insurance contract or the cash value of an annuity contract.(3) For purposes of this subsection, the term “portion” means only the terms and benefits under a life insurance contract or annuity contract that are in addition to the terms and benefits under the contract without regard to long-term care insurance coverage.(4) For purposes of this subsection, none of the following shall be treated as an annuity contract:(A) A trust described in section 401(a) which is exempt from tax under section 501(a).(B) A contract—(i) purchased by a trust described in subparagraph (A),(ii) purchased as part of a plan described in section 403(a),(iii) described in section 403(b),(iv) provided for employees of a life insurance company under a plan described in section 818(a)(3), or(v) from an individual retirement account or an individual retirement annuity.Any dividend described in section 404(k) which is received by a participant or beneficiary shall, for purposes of this paragraph, be treated as paid under a separate contract to which subparagraph (B)(i) applies.
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(2) No deduction shall be allowed under section 213(a) for any payment made for coverage under a qualified long-term care insurance contract if such payment is made as a charge against the cash surrender value of a life insurance contract or the cash value of an annuity contract.
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(3) For purposes of this subsection, the term “portion” means only the terms and benefits under a life insurance contract or annuity contract that are in addition to the terms and benefits under the contract without regard to long-term care insurance coverage.
Citations to §7702(b)(2)
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(B) by applying the rules of section 7702(b)(2) and of section 7702(e) (other than paragraph (2)(C) thereof), except that the death benefit provided for the 1st contract year shall be deemed to be provided until the maturity date without regard to any scheduled reduction after the 1st 7 contract years.
Citations to §7702(e)
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(B) by applying the rules of section 7702(b)(2) and of section 7702(e) (other than paragraph (2)(C) thereof), except that the death benefit provided for the 1st contract year shall be deemed to be provided until the maturity date without regard to any scheduled reduction after the 1st 7 contract years.
Citations to §7702(e)(2)(A)
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(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph (A) or (B) of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and
Citations to §7702(e)(2)(B)
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(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph (A) or (B) of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and
Citations to §7702(e)(2)(C)(iii)
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(B) Notwithstanding subparagraph (A), paragraph (4)(A) shall not apply to any assignment (or pledge) of a modified endowment contract if such assignment (or pledge) is solely to cover the payment of expenses referred to in section 7702(e)(2)(C)(iii) and if the maximum death benefit under such contract does not exceed $25,000.
Citations to §7702(f)(1)(A)
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(5) the premiums paid for the coverage for the calendar year, and
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(5) The Secretary may by regulations prescribe rules for taking into account expenses solely attributable to the collection of premiums paid more frequently than annually.
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(i) the premiums paid under the contract, reduced by
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(B) If, in order to comply with the requirements of subsection (b), any portion of any premium paid during any contract year is returned by the insurance company (with interest) within 60 days after the end of such contract year, the amount so returned (excluding interest) shall be deemed to reduce the sum of the premiums paid under the contract during such contract year.
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(C) Paragraph (1)(E) shall not apply to any refund on the death of the insured, or on a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract. Any refund on a complete surrender or cancellation of the contract shall be includible in gross income to the extent that any deduction or exclusion was allowable with respect to the premiums.
Citations to §7702(f)(3)
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(1) Every person who makes a payment of reportable death benefits during any taxable year shall make a return for such taxable year (at such time and in such manner as the Secretary shall prescribe) setting forth—(B) the name, address, and TIN of each recipient of such payment,(C) the date of each such payment,(D) the gross amount of each such payment, and(E) such person’s estimate of the investment in the contract (as defined in section 72(e)(6)) with respect to the buyer.
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(4) The term “reportable death benefits” means amounts paid by reason of the death of the insured under a life insurance contract that has been transferred in a reportable policy sale.
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(B) by applying the rules of section 7702(b)(2) and of section 7702(e) (other than paragraph (2)(C) thereof), except that the death benefit provided for the 1st contract year shall be deemed to be provided until the maturity date without regard to any scheduled reduction after the 1st 7 contract years.
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(B) For purposes of subparagraph (A), the term “material change” includes any increase in the death benefit under the contract or any increase in, or addition of, a qualified additional benefit under the contract. Such term shall not include—(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph (A) or (B) of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and(ii) to the extent provided in regulations, any cost-of-living increase based on an established broad-based index if such increase is funded ratably over the remaining period during which premiums are required to be paid under the contract.
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(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph (A) or (B) of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and
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(A) which provides an initial death benefit of $10,000 or less, and
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(A) a contract provides a death benefit which is payable only upon the death of 1 insured following (or occurring simultaneously with) the death of another insured, and
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(B) there is a reduction in such death benefit below the lowest level of such death benefit provided under the contract during the 1st 7 contract years,
Citations to §7702(f)(4)
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(b) For purposes of subsection (a), a contract fails to meet the 7-pay test of this subsection if the accumulated amount paid under the contract at any time during the 1st 7 contract years exceeds the sum of the net level premiums which would have been paid on or before such time if the contract provided for paid-up future benefits after the payment of 7 level annual premiums.
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(E) all refunds of premiums, and all policyholder dividends or similar amounts, under such contract are to be applied as a reduction in future premiums or to increase future benefits, and
Citations to §7702(f)(5)(A)
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(i) any increase which is attributable to the payment of premiums necessary to fund the lowest level of the death benefit and qualified additional benefits payable in the 1st 7 contract years (determined after taking into account death benefit increases described in subparagraph (A) or (B) of section 7702(e)(2)) or to crediting of interest or other earnings (including policyholder dividends) in respect of such premiums, and
Citations to §7702(f)(11)(D)
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(1) if such adjustments result in an imputed underpayment, the partnership shall pay an amount equal to such imputed underpayment in the adjustment year as provided in section 6232, and
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(2) if such adjustments do not result in an imputed underpayment, such adjustments shall be taken into account by the partnership in the adjustment year.
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(ii) for the partnership to take such net decrease into account as an adjustment in the adjustment year with respect to the specified partners to which such net decrease relates.
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(ii) such passive activity loss so determined with respect to such partner’s taxable year in which or with which the adjustment year of such partnership ends.
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(i) is a partner of the publicly traded partnership referred to in subparagraph (A),(ii) is described in section 469(a)(2), and(iii) has a specified passive activity loss with respect to such publicly traded partnership,with respect to each taxable year of such person which is during the period beginning with the taxable year of such person in which or with which the reviewed year of such publicly traded partnership ends and ending with the taxable year of such person in which or with which the adjustment year of such publicly traded partnership ends.
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(2) The term “adjustment year” means the partnership taxable year in which—(A) in the case of an adjustment pursuant to the decision of a court in a proceeding brought under section 6234, such decision becomes final,(B) in the case of an administrative adjustment request under section 6227, such administrative adjustment request is made, or(C) in any other case, notice of the final partnership adjustment is mailed under section 6231.
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(B) For purposes of subparagraph (A), with respect to a partner’s share of the adjustment, the partnership adjustment tracking report shall be filed, and the imputed underpayment shall be paid or statements shall be furnished, not later than the due date for the return for the adjustment year of the audited partnership.
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(a) Any imputed underpayment shall be assessed and collected in the same manner as if it were a tax imposed for the adjustment year by subtitle A, except that—(1) subchapter B of chapter 63 shall not apply, and(2) in the case of an administrative adjustment request to which section 6227(b)(1) applies, the underpayment shall be paid and may be assessed when the request is filed.
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(B) the Secretary may assess upon each partner of the partnership (determined as of the close of the adjustment year or, if the partnership has ceased to exist as of such time, the former partners of the partnership as determined for purposes of section 6241(7)) a tax equal to such partner’s proportionate share of such amount (including any such interest or penalties, determined after application of subparagraph (A)).
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(2) The interest computed under this paragraph with respect to any partnership adjustment is the interest which would be determined under chapter 67 for the period beginning on the day after the return due date for the reviewed year and ending on the return due date for the adjustment year (or, if earlier, the date payment of the imputed underpayment is made). Proper adjustments in the amount determined under the preceding sentence shall be made for adjustments required for partnership taxable years after the reviewed year and before the adjustment year by reason of such partnership adjustment.
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(2) Interest determined under this paragraph is the interest that would be determined by treating the imputed underpayment as an underpayment of tax imposed in the adjustment year.
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(ii) shall be so imposed (or so required to be deducted or withheld) with respect to the adjustment year.
Citations to §7702(h)(2)
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(A) The term “applicable insurance contract” means any life insurance, annuity, or endowment contract with respect to which both an applicable exempt organization and a person other than an applicable exempt organization have directly or indirectly held an interest in the contract (whether or not at the same time).
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(B) Such term shall not include a life insurance, annuity, or endowment contract if—(i) all persons directly or indirectly holding any interest in the contract (other than applicable exempt organizations) have an insurable interest in the insured under the contract independent of any interest of an applicable exempt organization in the contract,(ii) the sole interest in the contract of an applicable exempt organization or each person other than an applicable exempt organization is as a named beneficiary, or(iii) the sole interest in the contract of each person other than an applicable exempt organization is—
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(1) A levy on an organization with respect to a life insurance or endowment contract issued by such organization shall, without necessity for the surrender of the contract document, constitute a demand by the Secretary for payment of the amount described in paragraph (2) and the exercise of the right of the person against whom the tax is assessed to the advance of such amount. Such organization shall pay over such amount 90 days after service of notice of levy. Such notice shall include a certification by the Secretary that a copy of such notice has been mailed to the person against whom the tax is assessed at his last known address.
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(A) the individual may contribute such property or an amount equal to the sum of—(i) the amount of money so returned by the Secretary, and(ii) interest paid under subsection (c) on such amount of money,into such eligible retirement plan if such contribution is permitted by the plan, or into an individual retirement plan (other than an endowment contract) to which a rollover contribution of a distribution from such eligible retirement plan is permitted, but only if such contribution is made not later than the due date (not including extensions) for filing the return of tax for the taxable year in which such property or amount of money is returned, and
Citations to §7702(j)(3)(A)
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(1) no return shall be required under this subsection from churches, their integrated auxiliaries, conventions or associations of churches, or any organization which is not a private foundation (as defined in section 509(a)) and the gross receipts of which in each taxable year are normally not more than $5,000, and
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(2) any other plan (including any governmental plan or church plan (within the meaning of section 414)),
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(c) For provisions restricting church tax inquiries and examinations, see section 7611.
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(A) the reasonable belief requirements of paragraph (2), and(B) the notice requirements of paragraph (3), have been met.
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(2) The requirements of this paragraph are met with respect to any church tax inquiry if an appropriate high-level Treasury official reasonably believes (on the basis of facts and circumstances recorded in writing) that the church—(A) may not be exempt, by reason of its status as a church, from tax under section 501(a), or(B) may be carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities subject to taxation under this title.
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(A) may not be exempt, by reason of its status as a church, from tax under section 501(a), or
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(1) The Secretary may begin a church tax examination only if the requirements of paragraph (2) have been met and such examination may be made only—(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and
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(A) in the case of church records, to the extent necessary to determine the liability for, and the amount of, any tax imposed by this title, and
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(2) The requirements of this paragraph are met with respect to any church tax examination if—(A) at least 15 days before the beginning of such examination, the Secretary provides the notice described in paragraph (3) to both the church and the appropriate regional counsel of the Internal Revenue Service, and(B) the church has a reasonable time to participate in a conference described in paragraph (3)(A)(iii), but only if the church requests such a conference before the beginning of the examination.
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(A) at least 15 days before the beginning of such examination, the Secretary provides the notice described in paragraph (3) to both the church and the appropriate regional counsel of the Internal Revenue Service, and
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(B) the church has a reasonable time to participate in a conference described in paragraph (3)(A)(iii), but only if the church requests such a conference before the beginning of the examination.
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(i) a copy of the church tax inquiry notice provided to the church under subsection (a),
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(B) The examination notice described in subparagraph (A) shall not be provided to the church before the 15th day after the date on which the church tax inquiry notice was provided to the church under subsection (a).
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(4) Within the course of a church tax examination which (at the time the examination begins) meets the requirements of paragraphs (1) and (2), the Secretary may examine any church records or religious activities which were not specified in the examination notice to the extent such examination meets the requirement of subparagraph (A) or (B) of paragraph (1) (whichever applies).
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(B) In the case of a church tax inquiry with respect to which there is no examination notice under subsection (b), the Secretary shall complete such inquiry (and make a final determination with respect thereto) not later than the date which is 90 days after the inquiry notice date.
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(iii) the Secretary is unable to take actions with respect to the church tax inquiry or examination by reason of an order issued in any judicial proceeding brought under section 7609,
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(A) determine that an organization is not a church which—(i) is exempt from taxation by reason of section 501(a), or(ii) is described in section 170(c), or
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(i) send a notice of deficiency of any tax involved in a church tax examination, or
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(ii) in the case of any tax with respect to which subchapter B of chapter 63 (relating to deficiency procedures) does not apply, assess any underpayment of such tax involved in a church tax examination,
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(i) In the case of any church tax examination with respect to the revocation of tax-exempt status under section 501(a), any tax imposed by chapter 1 (other than section 511) may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, only for the 3 most recent taxable years ending before the examination notice date.
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(ii) If an organization is not a church exempt from tax under section 501(a) for any of the 3 taxable years described in clause (i), clause (i) shall be applied by substituting “6 most recent taxable years” for “3 most recent taxable years”.
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(B) In the case of any church tax examination with respect to the tax imposed by section 511 (relating to unrelated business income), such tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, only with respect to the 6 most recent taxable years ending before the examination notice date.
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(1) If there has not been substantial compliance with—(B) the conference requirement described in subsection (b)(3)(A)(iii), or(C) the approval requirement of subsection (d)(1) (if applicable),with respect to any church tax inquiry or examination, any proceeding to compel compliance with any summons with respect to such inquiry or examination shall be stayed until the court finds that all practicable steps to correct the noncompliance have been taken. The period applicable under paragraph (1) or subsection (c) shall not be suspended during the period of any stay under the preceding sentence.
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(1) If any church tax inquiry or examination with respect to any church is completed and does not result in—(A) a revocation, notice of deficiency, or assessment described in subsection (d)(1), or(B) a request by the Secretary for any significant change in the operational practices of the church (including the adequacy of accounting practices),no other church tax inquiry or examination may begin with respect to such church during the applicable 5-year period unless such inquiry or examination is approved in writing by the Secretary or does not involve the same or similar issues involved in the preceding inquiry or examination. For purposes of the preceding sentence, an inquiry or examination shall be treated as completed not later than the expiration of the applicable period under paragraph (1) of subsection (c).
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(g) Any final report of an agent of the Internal Revenue Service shall be treated as a determination of the Secretary under paragraph (1) of section 7428(a), and any church receiving such a report shall be treated for purposes of sections 7428 and 7430 as having exhausted the administrative remedies available to it.
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(A) any organization claiming to be a church, and
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(B) any convention or association of churches.
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(2) The term “church tax inquiry” means any inquiry to a church (other than an examination) to serve as a basis for determining whether a church—(A) is exempt from tax under section 501(a) by reason of its status as a church, or(B) is carrying on an unrelated trade or business (within the meaning of section 513) or otherwise engaged in activities which may be subject to taxation under this title.
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(A) is exempt from tax under section 501(a) by reason of its status as a church, or
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(3) The term “church tax examination” means any examination for purposes of making a determination described in paragraph (2) of—(A) church records at the request of the Internal Revenue Service, or(B) the religious activities of any church.
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(A) church records at the request of the Internal Revenue Service, or
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(B) the religious activities of any church.
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(5) The term “inquiry notice date” means the date the notice with respect to a church tax inquiry is provided under subsection (a).
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(6) The term “examination notice date” means the date the notice with respect to a church tax examination is provided under subsection (b) to the church.
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(v) loans (including redeemable ground rents, as defined in section 1055) secured by an interest in real property which is (or, from the proceeds of the loan, will become) residential real property or real property used primarily for church purposes, loans made for the improvement of residential real property or real property used primarily for church purposes, provided that for purposes of this clause, residential real property shall include single or multifamily dwellings, facilities in residential developments dedicated to public use or property used on a nonprofit basis for residents, and mobile homes not used on a transient basis,