Page 97 - Tax Reform

PUBLIC LAW 115–97—DEC. 22, 2017 131 STAT. 2147

(1) Section 808 is amended by adding at the end the fol- 26 USC 808.
lowing new subsection:
‘‘(g) PREVAILING STATE ASSUMED INTEREST RATE.—For purposes
of this subchapter—
‘‘(1) IN GENERAL.—The term ‘prevailing State assumed
interest rate’ means, with respect to any contract, the highest
assumed interest rate permitted to be used in computing life
insurance reserves for insurance contracts or annuity contracts
(as the case may be) under the insurance laws of at least
26 States. For purposes of the preceding sentence, the effect
of nonforfeiture laws of a State on interest rates for reserves
shall not be taken into account.
‘‘(2) WHEN RATE DETERMINED.—The prevailing State
assumed interest rate with respect to any contract shall be
determined as of the beginning of the calendar year in which
the contract was issued.’’.
(2) Paragraph (1) of section 811(d) is amended by striking
‘‘the greater of the prevailing State assumed interest rate or
applicable Federal interest rate in effect under section 807’’
and inserting ‘‘the interest rate in effect under section 808(g)’’.
(3) Subparagraph (A) of section 846(f)(6) is amended by
striking ‘‘except that’’ and all that follows and inserting ‘‘except
that the limitation of subsection (a)(3) shall apply, and’’.
(4) Section 848(e)(1)(B)(iii) is amended by striking
‘‘807(e)(4)’’ and inserting ‘‘807(e)(3)’’.
(5) Subparagraph (B) of section 954(i)(5) is amended by
striking ‘‘shall be substituted for the prevailing State assumed
interest rate,’’ and inserting ‘‘shall apply,’’.
(c) EFFECTIVE DATE.— 26 USC 807 note.
(1) IN GENERAL.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2017.
(2) TRANSITION RULE.—For the first taxable year beginning
after December 31, 2017, the reserve with respect to any con-
tract (as determined under section 807(d) of the Internal Rev-
enue Code of 1986) at the end of the preceding taxable year
shall be determined as if the amendments made by this section
had applied to such reserve in such preceding taxable year.
(3) TRANSITION RELIEF.—
(A) IN GENERAL.—If—
(i) the reserve determined under section 807(d)
of the Internal Revenue Code of 1986 (determined after
application of paragraph (2)) with respect to any con-
tract as of the close of the year preceding the first
taxable year beginning after December 31, 2017, differs
from
(ii) the reserve which would have been determined
with respect to such contract as of the close of such
taxable year under such section determined without
regard to paragraph (2),
then the difference between the amount of the reserve
described in clause (i) and the amount of the reserve
described in clause (ii) shall be taken into account under
the method provided in subparagraph (B).
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(B) METHOD.—The method provided in this subpara-
graph is as follows: