PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3453

(1) Section 832 of the 1986 Code (defining insurance company
taxable income) is amended by adding at the end thereof the
following new subsection:

"(g) DIVIDENDS WITHIN GROUP.—In the case of an insurance com-
pany subject to tax under section 831(a) filing or required to file a
consolidated return under section 1501 with respect to any affiliated
group for any taxable year, any determination under this part with
respect to any dividend paid by one member of such group to
another member of such group shall be made as if such group were
not filing a consolidated return/*

(2) Subdause (TO of section 832(bX5XBXii) of the 1986 Code
(relating to losses incurred) is amended by inserting "(directly
or indirectly)" after "attributable".

(3) For purposes of section 832(bX5XCXi) of the 1986 Code, any 26 USC 832 note.
stock or obligation acquired on or after August 8, 1986, by an

insurance company subject to the tax imposed by section 831 of
the 1986 Code (hereinafter in this paragraph referred to as the
"acquiring company") from another insurance company so sub-
ject (hereinafter in this paragraph referred to as the "transferor
company") shall be treated as acquired on the date on which
such stock or obligation was acquired by the transferor com-
pany if—

(A) the transferor company acquired such stock or obliga-
tion before August 8,1986, and

(B) at all times after the date on which such stock or
obligation was acquired by the transferor company and
before the date of the acquisition by the acquiring company,
the transferor company and the acquiring company were
members of the same affiliated group filing a consolidated
return.

For purposes of the preceding sentence, the date on which the
stock or obligation was acquired by the transferor company
shall be determined with regard to any prior application of the
preceding sentence. For purposes of this paragraph, if the
acquiring corporation or transferor corporation was a party to a
reorganization described in section 368(aXlXF) of the 1986 Code,
any reference to such corporation shall include a reference to
any predecessor thereof involved in such reorganization,
(e) AMENDBCENTS RELATED TO SECTION 1023 OF THE REFORM ACT.—

(1) Subparagraph (B) of section 846(fX6) of the 1986 Code
(relating to special rule for certain accident and health insur-
ance lines of business) is amended by striking out "paid during
the year" and inserting in lieu thereof "paid in the middle of
the year".

(2) Subsection (g) of section 846 of the 1986 Code is amended
by striking out "and" at the end of paragraph (1), by striking
out the period at the end of paragraph (2) and inserting in lieu
thereof ", and", and by adding at the end thereof the following
new paragraph:

"(3) regulations providing appropriate adjustments in the
application of this section to a taxpayer having a taxable year
which is not the calendar year."

(3) Subsection (e) of section 1023 of the Reform Act (relating to 26 USC 846 note.
discounting of unpaid losses and certain unpaid expenses) is

amended by adding at the end thereof the following new
paragraph: