---
kind: "section"
citation: "26 U.S.C. § 805"
title: "26"
title_heading: "Internal Revenue Code"
number: "805"
heading: "General deductions"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/805"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter L — Insurance Companies"
  - "Part I — Life Insurance Companies"
  - "Subpart C — Life Insurance Deductions"
---

# §805. General deductions

- (a) **General rule—** For purposes of this part, there shall be allowed the following deductions:
  - (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](/usc/26/414.md?p=z-4-B).
  - (2) **Increases in certain reserves—** The net increase in reserves which is required by [section 807(b)](/usc/26/807.md?p=b) to be taken into account under this paragraph.
  - (3) **Policyholder dividends—** The deduction for [policyholder](/usc/26/812.md?p=b) [dividends](/usc/26/316.md?p=a) (determined under [section 808(c)](/usc/26/808.md?p=c)).
  - (4) **Dividends received by company—**
    - (A) **In general—** The deductions provided by sections [243](/usc/26/243.md) and [245](/usc/26/245.md) (as modified by [subparagraph (B)](#a-4-B))—
      - (i) for 100 percent [dividends](/usc/26/316.md?p=a) received, and
      - (ii) for the [life insurance company](/usc/26/816.md?p=a)’s share of the [dividends](/usc/26/316.md?p=a) (other than 100 percent [dividends](/usc/26/316.md?p=a)) received.
    - (B) **Application of section 246(b)—** In applying [section 246(b)](/usc/26/246.md?p=b) (relating to limitation on aggregate amount of deductions for [dividends](/usc/26/316.md?p=a) received) for purposes of [subparagraph (A)](#a-4-A), the limit on the aggregate amount of the deductions allowed by sections [243(a)(1)](/usc/26/243.md?p=a-1) and [245](/usc/26/245.md) shall be the percentage determined under [section 246(b)(3)](/usc/26/246.md?p=b-3) of the [life insurance company](/usc/26/816.md?p=a) [taxable income](/usc/26/63.md?p=a) (and such limitation shall be applied as provided in [section 246(b)(3)](/usc/26/246.md?p=b-3)), computed without regard to—
      - (i) the deduction allowed under [section 172](/usc/26/172.md),
      - (ii) the deductions allowed by sections [243(a)(1)](/usc/26/243.md?p=a-1) and [245](/usc/26/245.md), and
      - (iii) any capital loss carryback to the taxable year under [section 1212(a)(1)](/usc/26/1212.md?p=a-1),

      but such limit shall not apply for any taxable year for which there is a loss from operations.

    - (C) **100 percent dividend—** For purposes of [subparagraph (A)](#a-4-A)—
      - (i) **In general—** Except as provided in [clause (ii)](#a-4-C-ii), the term “100 percent [dividend](/usc/26/316.md?p=a)” means any [dividend](/usc/26/316.md?p=a) if the percentage used for purposes of determining the deduction allowable under section [243](/usc/26/243.md) or [245(b)](/usc/26/245.md?p=b) is 100 percent.
      - (ii) **Treatment of dividends from noninsurance companies—** The term “100 percent [dividend](/usc/26/316.md?p=a)” does not include any distribution by a corporation which is not an insurance [company](/usc/26/812.md?p=a) to the extent such distribution is out of [tax-exempt](/usc/26/150.md?p=a-6) [interest](/usc/26/856.md?p=f-1), or out of the increase for the taxable year in policy [cash](/usc/26/856.md?p=c-5-K) [values](/usc/26/851.md?p=c-4) (within the meaning of [subparagraph (F)](#a-4-F)) of life insurance policies and annuity and endowment [contracts](/usc/26/101.md?p=f-3-A) to which [section 264(f)](/usc/26/264.md?p=f) applies, or out of [dividends](/usc/26/316.md?p=a) which are not 100 percent [dividends](/usc/26/316.md?p=a) (determined with the application of this clause as if it applies to distributions by all corporations including insurance [companies](/usc/26/812.md?p=a)).
    - (D) **Special rules for certain dividends from insurance companies—**
      - (i) **In general—** In the case of any 100 percent [dividend](/usc/26/316.md?p=a) paid to any [life insurance company](/usc/26/816.md?p=a) out of the earnings and profits for any taxable year beginning after December 31, 1983, of another [life insurance company](/usc/26/816.md?p=a) if—
        - (I) the paying [company](/usc/26/812.md?p=a)’s share determined under [section 812](/usc/26/812.md) for such taxable year, exceeds
        - (II) the receiving [company](/usc/26/812.md?p=a)’s share determined under [section 812](/usc/26/812.md) for its taxable year in which the [dividend](/usc/26/316.md?p=a) is received or accrued,

      the deduction allowed under section [243](/usc/26/243.md) or [245(b)](/usc/26/245.md?p=b) (as the case may be) shall be reduced as provided in [clause (ii)](#a-4-D-ii).

      - (ii) **Amount of reduction—** The reduction under this clause for a [dividend](/usc/26/316.md?p=a) is an amount equal to—
        - (I) the portion of such [dividend](/usc/26/316.md?p=a) attributable to prorated amounts, multiplied by
        - (II) the percentage obtained by subtracting the share described in [subclause (II)](#a-4-D-i-II) of clause (i) from the share described in [subclause (I)](#a-4-D-ii-I) of such clause.
      - (iii) **Prorated amounts—** For purposes of this subparagraph, the term “prorated amounts” means [tax-exempt](/usc/26/150.md?p=a-6) [interest](/usc/26/856.md?p=f-1), the increase for the taxable year in policy [cash](/usc/26/856.md?p=c-5-K) [values](/usc/26/851.md?p=c-4) (within the meaning of [subparagraph (F)](#a-4-F)) of life insurance policies and annuity and endowment [contracts](/usc/26/101.md?p=f-3-A) to which [section 264(f)](/usc/26/264.md?p=f) applies, and [dividends](/usc/26/316.md?p=a) other than 100 percent [dividends](/usc/26/316.md?p=a).
      - (iv) **Portion of dividend attributable to prorated amounts—** For purposes of this subparagraph, in determining the portion of any [dividend](/usc/26/316.md?p=a) attributable to prorated amounts—
        - (I) any [dividend](/usc/26/316.md?p=a) 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.
      - (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](/usc/26/316.md?p=a) paid by an insurance [company](/usc/26/812.md?p=a) which is not a [life insurance company](/usc/26/816.md?p=a).
    - (E) **Certain dividends received by foreign corporations—** [Subparagraph (A)(i)](#a-4-A-i) (and not [subparagraph (A)(ii)](#a-4-A-ii)) shall apply to any [dividend](/usc/26/316.md?p=a) received by a foreign corporation from a domestic corporation which would be a 100 percent [dividend](/usc/26/316.md?p=a) if [section 1504(b)(3)](/usc/26/1504.md?p=b-3) did not apply for purposes of applying [section 243(b)(2)](/usc/26/243.md?p=b-2).
    - (F) **Increase in policy cash values—** For purposes of subparagraphs [(C)](#a-4-C) and [(D)](#a-4-D)—
      - (i) **In general—** The increase in the policy [cash](/usc/26/856.md?p=c-5-K) [value](/usc/26/851.md?p=c-4) for any taxable year with respect to policy or [contract](/usc/26/101.md?p=f-3-A) is the amount of the increase in the adjusted [cash](/usc/26/856.md?p=c-5-K) [value](/usc/26/851.md?p=c-4) during such taxable year determined without regard to—
        - (I) gross [premiums paid](/usc/26/101.md?p=f-3-B) during such taxable year, and
        - (II) distributions (other than amounts includible in the [policyholder](/usc/26/812.md?p=b)’s gross income) during such taxable year to which [section 72(e)](/usc/26/72.md?p=e) applies.
      - (ii) **Adjusted cash value—** For purposes of [clause (i)](#a-4-F-i), the term “adjusted [cash](/usc/26/856.md?p=c-5-K) [value](/usc/26/851.md?p=c-4)” means the [cash](/usc/26/856.md?p=c-5-K) surrender [value](/usc/26/851.md?p=c-4) of the policy or [contract](/usc/26/101.md?p=f-3-A) increased by the sum of—
        - (I) commissions payable with respect to such policy or [contract](/usc/26/101.md?p=f-3-A) 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](/usc/26/101.md?p=f-3-A) canceled) with respect to such policy or [contract](/usc/26/101.md?p=f-3-A) for the taxable year.
  - (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—** 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](/usc/26/414.md?p=z-4-B).
  - (7) **Reimbursable dividends—** The amount of [policyholder](/usc/26/812.md?p=b) [dividends](/usc/26/316.md?p=a) which—
    - (A) are paid or accrued by another insurance [company](/usc/26/812.md?p=a) in respect of policies the [taxpayer](/usc/26/1313.md?p=b) has reinsured, and
    - (B) are reimbursable by the [taxpayer](/usc/26/1313.md?p=b) under the terms of the reinsurance [contract](/usc/26/101.md?p=f-3-A).
  - (8) **Other deductions—** Subject to the [modifications](/usc/26/424.md?p=h-3) provided by [subsection (b)](#b), all other deductions allowed under this subtitle for purposes of computing [taxable income](/usc/26/63.md?p=a).

  Except as provided in [paragraph (3)](#a-3), no amount shall be allowed as a deduction under this part in respect of [policyholder](/usc/26/812.md?p=b) [dividends](/usc/26/316.md?p=a).

- (b) **Modifications—** The [modifications](/usc/26/424.md?p=h-3) referred to in [subsection (a)(8)](#a-8) are as follows:
  - (1) **Interest—** In applying [section 163](/usc/26/163.md) (relating to deduction for [interest](/usc/26/856.md?p=f-1)), no deduction shall be allowed for [interest](/usc/26/856.md?p=f-1) in respect of items described in [section 807(c)](/usc/26/807.md?p=c).
  - (2) **Charitable, etc., contributions and gifts—** In applying [section 170](/usc/26/170.md)—
    - (A) the limit on the total deductions under such section provided by [section 170(b)(2)](/usc/26/170.md?p=b-2) shall be 10 percent of the [life insurance company](/usc/26/816.md?p=a) [taxable income](/usc/26/63.md?p=a) computed without regard to—
      - (i) the deduction provided by [section 170](/usc/26/170.md),
      - (ii) the deductions provided by paragraphs [(3)](#a-3) and [(4)](#a-4) of subsection (a),
      - (iii) any net operating loss carryback to the taxable year under [section 172](/usc/26/172.md), and
      - (iv) any capital loss carryback to the taxable year under [section 1212(a)(1)](/usc/26/1212.md?p=a-1), and
    - (B) under regulations prescribed by the Secretary, a rule similar to the rule contained in [section 170(d)(2)(B)](/usc/26/170.md?p=d-2-B)[^1] (relating to special rule for net operating loss carryovers) shall be applied.
  - (3) **Amortizable bond premium—**
    - (A) **In general—** [Section 171](/usc/26/171.md) shall not apply.
    - (B) **Cross reference—** For rules relating to amortizable [bond](/usc/26/150.md?p=a-1) premium, see [section 811(b)](/usc/26/811.md?p=b).
  - (4) **Dividends received deduction—** Except as provided in [subsection (a)(4)](#a-4), the deductions for [dividends](/usc/26/316.md?p=a) received provided by sections [243](/usc/26/243.md) and [245](/usc/26/245.md) shall not be allowed.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Added Pub. L. 98–369, div. A, title II, § 211(a), July 18, 1984, 98 Stat. 722; amended Pub. L. 99–514, title VI, § 611(a)(5), title VIII, § 805(c)(6), title X, § 1011(b)(4), title XVIII, § 1821(p), Oct. 22, 1986, 100 Stat. 2249, 2362, 2389, 2842; Pub. L. 100–203, title X, § 10221(c)(2), Dec. 22, 1987, 101 Stat. 1330–409; Pub. L. 104–188, title I, § 1702(h)(3), Aug. 20, 1996, 110 Stat. 1873; Pub. L. 105–34, title X, § 1084(b)(1), Aug. 5, 1997, 111 Stat. 954; Pub. L. 113–295, div. A, title II, § 221(a)(41)(G), (I), Dec. 19, 2014, 128 Stat. 4044; Pub. L. 115–97, title I, §§ 13511(a), (b)(4)–(6), 13512(b)(5), (6), Dec. 22, 2017, 131 Stat. 2142, 2143.)

## Notes

### Editorial Notes

### References in Text

Section 170(d)(2), referred to in subsec. (b)(2)(B), was amended generally by Pub. L. 119–21, title VII, § 70426(b), July 4, 2025, 139 Stat. 237. As so amended, provisions relating to special rule for net operating loss carryovers are now contained in section 170(d)(2)(D).

### Codification

Another section 1084(b) of Pub. L. 105–34 amended sections 101 and 264 of this title.

### Prior Provisions

A prior section 805, added Pub. L. 86–69, § 2(a), June 25, 1959, 73 Stat. 118; amended Pub. L. 87–792, § 7(g), Oct. 10, 1962, 76 Stat. 829; Pub. L. 88–571, § 5(a), Sept. 2, 1964, 78 Stat. 860; Pub. L. 91–172, title IX, § 907(a)(1), Dec. 30, 1969, 83 Stat. 715; Pub. L. 93–406, title II, §§ 1016(a)(6), 2002(g)(9), 2004(c)(3), Sept. 2, 1974, 88 Stat. 929, 970, 986; Pub. L. 94–267, § (1)(c)(4), Apr. 15, 1976, 90 Stat. 367; Pub. L. 94–455, title XIX, § 1901(a)(97), Oct. 4, 1976, 90 Stat. 1780; Pub. L. 95–600, title I, §§ 141(f)(9), 155(a), Nov. 6, 1978, 92 Stat. 2795, 2801; Pub. L. 97–248, title II, §§ 257(a), 260(b), 261, 264(a)–(c)(1), Sept. 3, 1982, 96 Stat. 537, 540, 543, 544, related to policy and other contract liability requirements, prior to general revision of this part by Pub. L. 98–369, § 211(a).

Another prior section 805, acts Aug. 16, 1954, ch. 736, 68A Stat. 258; Mar. 13, 1956, ch. 83, § 2, 70 Stat. 43, authorized a special interest deduction, prior to the general revision of this part by Pub. L. 86–69, § 2(a).

### Amendments

2017—Subsec. (a)(4)(B)(i). Pub. L. 115–97, § 13512(b)(5), redesignated cl. (ii) as (i) and struck out former cl. (i) which read as follows: “the small life insurance company deduction,”.

Subsec. (a)(4)(B)(ii). Pub. L. 115–97, § 13512(b)(5), redesignated cl. (iii) as (ii). Former cl. (ii) redesignated (i).

Pub. L. 115–97, § 13511(b)(4), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the operations loss deduction provided by section 810,”.

Subsec. (a)(4)(B)(iii), (iv). Pub. L. 115–97, § 13512(b)(5), redesignated cls. (iii) and (iv) as (ii) and (iii), respectively.

Subsec. (a)(5). Pub. L. 115–97, § 13511(b)(5), struck out par. (5) which provided for the operations loss deduction determined under section 810.

Subsec. (b)(2)(A)(iii). Pub. L. 115–97, § 13512(b)(6), redesignated cl. (iv) as (iii) and struck out former cl. (iii) which read as follows: “the small life insurance company deduction,”.

Subsec. (b)(2)(A)(iv). Pub. L. 115–97, § 13512(b)(6), redesignated cl. (v) as (iv). Former cl. (iv) redesignated (iii).

Pub. L. 115–97, § 13511(b)(6), amended cl. (iv) generally. Prior to amendment, cl. (iv) read as follows: “any operations loss carryback to the taxable year under section 810, and”.

Subsec. (b)(2)(A)(v). Pub. L. 115–97, § 13512(b)(6), redesignated cl. (v) as (iv).

Subsec. (b)(4), (5). Pub. L. 115–97, § 13511(a), redesignated par. (5) as (4) and struck out former par. (4) which did not allow the net operating loss deduction provided in section 172, except as provided by section 844.

2014—Subsec. (a)(4)(A). Pub. L. 113–295, § 221(a)(41)(G), struck out “, 244,” after “sections 243” in introductory provisions.

Subsec. (a)(4)(B). Pub. L. 113–295, § 221(a)(41)(I), struck out “, 244(a),” after “sections 243(a)(1)” in introductory provisions and in cl. (iii).

Subsec. (a)(4)(C)(i), (D)(i). Pub. L. 113–295, § 221(a)(41)(G), struck out “, 244,” after “section 243”.

Subsec. (b)(5). Pub. L. 113–295, § 221(a)(41)(G), struck out “, 244,” after “sections 243”.

1997—Subsec. (a)(4)(C)(ii). Pub. L. 105–34, § 1084(b)(1)(A), inserted “, 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,” after “tax-exempt interest”.

Subsec. (a)(4)(D)(iii). Pub. L. 105–34, § 1084(b)(1)(B), substituted “, 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” for “and”.

Subsec. (a)(4)(F). Pub. L. 105–34, § 1084(b)(1)(C), added subpar. (F).

1996—Subsec. (a)(4)(E). Pub. L. 104–188 substituted “243(b)(2)” for “243(b)(5)”.

1987—Subsec. (a)(4)(B). Pub. L. 100–203 substituted “shall be the percentage determined under section 246(b)(3) of the life insurance company taxable income (and such limitation shall be applied as provided in section 246(b)(3))” for “shall be 80 percent of the life insurance company taxable income”.

1986—Subsec. (a)(4)(B). Pub. L. 99–514, § 611(a)(5), substituted “80 percent” for “85 percent” in introductory provisions.

Subsec. (a)(4)(B)(i). Pub. L. 99–514, § 1011(b)(4), struck out “the special life insurance company deduction and” before “the small life”.

Subsec. (a)(4)(C) to (E). Pub. L. 99–514, § 1821(p), added subpars. (C) and (D), redesignated former subpar. (D) as (E), and struck out former subpar. (C) which read as follows: “For purposes of subparagraph (A), the term ‘100 percent dividend’ means any dividend if the percentage used for purposes of determining the deduction allowable under section 243 or 244 is 100 percent. Such term does not include any dividend to the extent it is a distribution out of tax-exempt interest or out of dividends which are not 100 percent dividends (determined with the application of this sentence).”

Subsec. (b)(2). Pub. L. 99–514, § 805(c)(6), redesignated par. (3) as (2). Former par. (2), which provided that section 166(c) (relating to reserve for bad debts) shall not apply, was struck out.

Subsec. (b)(2)(A)(iii). Pub. L. 99–514, § 1011(b)(4), which directed that subsec. (b)(3)(A)(iii) be amended by striking out “the special life insurance company deduction and” before “the small life”, was executed to subsec. (b)(2)(A)(iii) to reflect the probable intent of Congress and the redesignation of subsec. (b)(3) as (b)(2) by Pub. L. 99–514, § 805(c)(6).

Subsec. (b)(3) to (6). Pub. L. 99–514, § 805(c)(6), redesignated pars. (3) to (6) as (2) to (5), respectively.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2017 Amendment

Amendment by section 13511(a), (b)(4)–(6) of Pub. L. 115–97 applicable to losses arising in taxable years beginning after Dec. 31, 2017, see section 13511(c) of Pub. L. 115–97, set out as a note under section 381 of this title.

Amendment by section 13512(b)(5), (6) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13512(c) of Pub. L. 115–97, set out as a note under section 453B of this title.

### Effective Date of 2014 Amendment

Amendment by Pub. L. 113–295 not applicable to preferred stock issued before Oct. 1, 1942 (determined in the same manner as under section 247 of this title as in effect before its repeal by Pub. L. 113–295), see section 221(a)(41)(K) of Pub. L. 113–295, set out as a note under section 172 of this title.

Except as otherwise provided in section 221(a) of Pub. L. 113–295, amendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

### Effective Date of 1997 Amendment

Amendment by Pub. L. 105–34 applicable to contracts issued after June 8, 1997, in taxable years ending after such date, with special provisions relating to changes in contracts to be treated as new contracts, see section 1084(d) of Pub. L. 105–34, set out as a note under section 101 of this title.

### Effective Date of 1996 Amendment

Amendment by Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.

### Effective Date of 1987 Amendment

Amendment by Pub. L. 100–203 applicable to taxable years beginning after Dec. 31, 1987, see section 10221(e)(2) of Pub. L. 100–203, as amended, set out as a note under section 243 of this title.

### Effective Date of 1986 Amendment

Amendment by section 611(a)(5) of Pub. L. 99–514 applicable to dividends received or accrued after Dec. 31, 1986, in taxable years ending after such date, see section 611(b)(1) of Pub. L. 99–514, set out as a note under section 246 of this title.

Amendment by section 805(c)(6) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain changes required in method of accounting, see section 805(d) of Pub. L. 99–514, set out as a note under section 166 of this title.

Amendment by section 1011(b)(4) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 1011(c)(1) of Pub. L. 99–514, set out as a note under section 453B of this title.

Amendment by section 1821(p) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.

### Effective Date

Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 98–369, set out as a note under section 801 of this title.

### Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.