filing of the partnership return for the taxable year (not including extensions) which are agreed to by all the partners, or which are adopted in such other manner as may be provided by the partnership agreement. (d) LIQUIDATION OF A PARTNER'S INTEREST.-For purposes of this subchapter, the term "liquidation of a partner's interest" means the termination of a partner's entire interest in a partnership by means of a distribution, or a series of distributions, to the partner by the partnership. PART IV-EFFECTIVE DATE FOR SUBCHAPTER Sec. 771. Effective date. SEC. 771. EFFECTIVE DATE. (a) GENERAL RULE. (1) TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1954.Except as provided in subsection (b), this subchapter shall apply with respect to— (A) any partnership taxable year beginning after December 31, 1954, and (B) any part of a partner's taxable year falling within such partnership taxable year. (2) APPLICATION OF PRIOR PROVISIONS.-Except as provided in subsection (b), sections 113 (a) (13), 181 to 191 (inclusive), and 3797 (a) (2) of the Internal Revenue Code of 1939 shall apply with respect to (A) any partnership taxable year beginning before January 1, 1955, and (B) any part of a partner's taxable year falling within such partnership taxable year. (b) SPECIAL RULES. (1) ADOPTION OF TAXABLE YEAR.-Section 706 (b) (relating to the adoption of a taxable year by a partnership or partner) shall apply to (A) any partnership which adopts, or changes to, a taxable year beginning after April 1, 1954, and (B) any partner who changes to a taxable year beginning after April 1, 1954. For the purpose of applying this paragraph, section 708 (relating to the continuation of a partnership) shall be effective for taxable years beginning after April 1, 1954. (2) PROPERTY DISTRIBUTED BY A PARTNERSHIP.-Section 735 (a) (relating to the character of gain or loss on the disposition of property distributed by a partnership) shall apply only to property distributed by a partnership after March 9, 1954. (3) UNREALIZED RECEIVABLES AND INVENTORY ITEMS.-Section 751 (relating to unrealized receivables and inventory items) shall apply with respect to gain or loss to a seller, distributee, or partnership in the case of a sale, exchange, or distribution occurring after March 9, 1954. For the purpose of applying this paragraph in the case of a taxable year beginning before January 1, 1955, the other sections of this subchapter shall be applicable to the extent provided by regulations prescribed by the Secretary or his delegate. (4) PARTNER RECEIVING INCOME IN RESPECT OF DECEDENT. Section 753 (relating to income in respect of a decedent) shall apply only in the case of payments made with respect to decedents dying after December 31, 1954. (c) OPTIONAL TREATMENT OF CERTAIN DISTRIBUTIONS.-In the case of a partnership taxable year beginning after December 31, 1953, and before January 1, 1955, a partnership may elect, under regulations prescribed by the Secretary or his delegate, with respect to distributions made during such year to any partner, other than in liquidation of the partner's interest, to apply the rules in sections 731, 732 (a), (c), and (e), 733, 735, and 751 (b), (c), and (d) (and, to the extent applicable, the rules provided in sections 705, 752, and 761 (d)). If a partnership so elects, such rules shall be effective for the partnership and all members of such partnership with respect to such distributions. Subchapter L-Insurance Companies Part I. Life insurance companies. Part II. Mutual insurance companies (other than life or marine or fire insurance companies issuing perpetual policies). Part III. Other insurance companies. Part IV. Provisions of general application. PART I-LIFE INSURANCE COMPANIES Subpart A. Definition; tax imposed. Subpart C. Gain and loss from operations. Subpart A-Definition; Tax Imposed Sec. 801. Definition of life insurance company. SEC. 801. DEFINITION OF LIFE INSURANCE COMPANY. (a) LIFE INSURANCE COMPANY DEFINED.-For purposes of this subtitle, the term "life insurance company" means an insurance company which is engaged in the business of issuing life insurance and annuity contracts (either separately or combined with health and accident insurance), or noncancellable contracts of health and accident insurance, if (1) its life insurance reserves (as defined in subsection (b)), plus (2) unearned premiums, and unpaid losses (whether or not ascertained), on noncancellable life, health, or accident policies not included in life insurance reserves, comprise more than 50 percent of its total reserves (as defined in subsection (c)). (b) LIFE INSURANCE RESERVES DEFINED.— (1) IN GENERAL.-For purposes of this part, the term "life insurance reserves" means amounts (A) which are computed or estimated on the basis of recognized mortality or morbidity tables and assumed rates of interest, and (B) which are set aside to mature or liquidate, either by payment or reinsurance, future unaccrued claims arising from life insurance, annuity, and noncancellable health and accident insurance contracts (including life insurance or annuity contracts combined with noncancellable health and accident insurance) involving, at the time with respect to which the reserve is computed, life, health, or accident contingencies. (2) RESERVES MUST BE REQUIRED BY LAW.-Except (A) in the case of policies covering life, health, and accident insurance combined in one policy issued on the weekly premium payment plan, continuing for life and not subject to cancellation, (B) in the case of policies issued by an organization which meets the requirements of section 501 (c) (9) other than the requirement of subparagraph (B) thereof, and (C) as provided in paragraph (3), in addition to the requirements set forth in paragraph (1), life insurance reserves must be required by law. (3) ASSESSMENT COMPANIES.-In the case of an assessment life insurance company or association, the term "life insurance reserves" includes (A) sums actually deposited by such company or association with State or Territorial officers pursuant to law as guaranty or reserve funds, and (B) any funds maintained, under the charter or articles of incorporation or association (or bylaws approved by a State insurance commissioner) of such company or association, exclusively for the payment of claims arising under certificates of membership or policies issued on the assessment plan and not subject to any other use. For purposes of this part, the rate of interest assumed in calculating the reserves described in subparagraphs (A) and (B) shall be 3 percent. (4) DEFICIENCY RESERVES EXCLUDED.-The term "life insurance reserves" does not include deficiency reserves. For purposes of this subsection and subsection (c), the deficiency reserve for any contract is that portion of the reserve for such contract equal to the amount (if any) by which (A) the present value of the future net premiums required for such contract, exceeds (B) the present value of the future actual premiums and consideration charged for such contract. (5) AMOUNT OF RESERVES. For purposes of this subsection, subsection (a), and subsection (c), the amount of any reserve (or portion thereof) for any taxable year shall be the mean of such reserve (or portion thereof) at the beginning and end of the taxable year. (c) TOTAL RESERVES DEFINED.-For purposes of subsection (a), the term "total reserves" means (1) life insurance reserves, (2) unearned premiums, and unpaid losses (whether or not ascertained), not included in life insurance reserves, and (3) all other insurance reserves required by law. The term "total reserves" does not include deficiency reserves (within the meaning of subsection (b) (4)). (d) ADJUSTMENTS IN RESERVES FOR POLICY LOANS.-For purposes only of determining under subsection (a) whether or not an insurance company is a life insurance company, the life insurance reserves, and the total reserves, shall each be reduced by an amount equal to the mean of the aggregates, at the beginning and end of the taxable year, of the policy loans outstanding with respect to contracts for which life insurance reserves are maintained. (e) GUARANTEED RENEWABLE CONTRACTS.-For purposes of this part, guaranteed renewable life, health, and accident insurance shall be treated in the same manner as noncancellable life, health, and accident insurance. (f) BURIAL AND FUNERAL BENEFIT INSURANCE COMPANIES.—A burial or funeral benefit insurance company engaged directly in the manufacture of funeral supplies or the performance of funeral services shall not be taxable under this part but shall be taxable under section 821 or section 831. (g) VARIABLE ANNUITIES. (1) IN GENERAL.-For purposes of this part, an annuity contract includes a contract which provides for the payment of a variable annuity computed on the basis of recognized mortality tables and the investment experience of the company issuing the contract. (2) ADJUSTED Reserves rate; ASSUMED RATE.—-For purposes of this part (A) the adjusted reserves rate for any taxable year with respect to annuity contracts described in paragraph (1), and (B) the rate of interest assumed by the taxpayer for any taxable year in calculating the reserve on any such contract, shall be a rate equal to the current earnings rate determined under paragraph (3). (3) CURRENT EARNINGS RATE. For purposes of this part, the current earnings rate for any taxable year with respect to annuity contracts described in paragraph (1) is the current earnings rate determined under section 805 (b) (2) with respect to such contracts, reduced by the percentage obtained by dividing (A) the amount of the actuarial margin charge on all annuity contracts described in paragraph (1) issued by the taxpayer, by (B) the mean of the reserves for such contracts. (4) INCREASES AND DECREASES IN RESERVES. For purposes of subsections (a) and (b) of section 810, the sum of the items described in section 810 (c) taken into account as of the close of the taxable year shall, under regulations prescribed by the Secretary or his delegate, be adjusted (A) by subtracting therefrom an amount equal to the sum of the amounts added from time to time (for the taxable year) to the reserves for annuity contracts described in paragraph (1) by reason of appreciation in value of assets (whether or not the assets have been disposed of), and (B) by adding thereto an amount equal to the sum of the amounts subtracted from time to time (for the taxable year) from such reserves by reason of depreciation in value of assets (whether or not the assets have been disposed of). (5) COMPANIES ISSUING VARIABLE ANNUITIES AND OTHER CONTRACTS. In the case of a life insurance company which issues both annuity contracts described in paragraph (1) and other contracts, under regulations prescribed by the Secretary or his delegate (A) the policy and other contract liability requirements shall be considered to be the sum of— |