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TITLE 26-INTERNAL REVENUE CODE EFFECTIVE DATE Section applicable only with respect to taxable years beginning after Dec. 31, 1957, see section 4 of Pub. L. 86-69, set out as an Effective Date note under section 801 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to In sections 801, 804, 811, 818, 819 of this title. § 806. Certain changes in reserves and assets (a) Adjustments to means for certain transfers of li- abilities For purposes of this part, if, during the tax- able year, there is a change in life insurance re- serves attributable to the transfer between the taxpayer and another person of liabilities under contracts taken into account in comput- ing such reserves, then, under regulations pre- scribed by the Secretary, the means of such re- serves, and the mean of the assets, shall be ap- propriately adjusted, on a daily basis, to reflect the amounts involved in such transfer. This subsection shall not apply to reinsurance ceded to the taxpayer or to another person. (M) Change of basis in computing reserves If the basis for determining the amount of any item referred to in section 810(c) as of the close of the taxable year differs from the basis for such determination as of the beginning of the taxable year, then for purposes of this sub- part the amount of such item- (1) as of the close of the taxable year shall be computed on the old basis, and (2) as of the beginning of the next taxable year shall be computed on the new basis. (Added Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 120, and amended Pub, L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) PRIOR PROVISIONS A prior section 806, act Aug. 16, 1954, ch. 736, 68A Stat. 258, related to adjustment for certain reserves prior to the general revision of this part by Pub. L. 86- 69, § 2(a). A prior section 807, act Aug. 16, 1954, ch. 736, 68A Stat. 259, which related to adjustment for certain re- serves, was omitted from this part by act Mar. 13, 1956, ch. 83, § 2, 70 Stat. 36, which amended this part in its entirety. AMENDMENTS 1976-Subsec. (a). Pub. L. 94-455 struck out "or his delegate" following "Secretary". EFFECTIVE DATE Section applicable only with respect to taxable years beginning after Dec. 31, 1957, see section 4 of Pub. L. 86-69, set out as an Effective Date note under section 801 of this title. SUBPART C-GAIN AND Loss FROM OPERATIONS See. 809, In general. 810. Rules for certain reserves. 811. Dividends to policyholders. 812, Operations loss dcduction. § 809. In general (a) Exclusion of share of investment yield set aside for policyholders (1) Amount The share of each and every item of invest- ment yield (including tax-exempt interest and dividends received) of any life insurance com- pany set aside for policyholders shall not be included in gain or loss from operations. For purposes of the preceding sentence, the share of any item set aside for policyholders shall be that percentage obtained by dividing the required interest by the investment yield; except that if the required interest exceeds the investment yield, then the share of any item set aside for policyholders shall be 100 percent. (2) Required interest For purposes of this part, the required in- terest for any taxable year is the sum of the products obtained by multiplying- (A) each rate of interest required, or as- sumed by the taxpayer, in calculating the reserves described in section 810(c), by (B) the means of the amount of such re- serves computed at that rate at the begin- ning and end of the taxable year. (Wi Gain and loss from operations (1) Gain from operations defined For purposes of this part, the term "gain from operations" means the amount by which the sum of the following exceeds the deduc- tions provided by subsection (d): (A) the life insurance company's share of each and every item of investment yield (in- cluding tax-exempt interest and dividends received); (B) the amount (if any) of the net capital gain; and (C) the sum of the items referred to in subsection (c). (2) Loss from operations defined For purposes of this part, the term "loss from operations" means the amount by which the sum of the deductions provided by subsec- tion (d) exceeds the sum of- (A) the life insurance company's share of each and every item of investment yield (in- cluding tax-exempt interest and dividends received); (B) the amount (if any) of the net capital gain; and (C) the sum of the items referred to in subsection (c). (3) Life insurance company's share For purposes of this subpart, the life insur- ance company's share of any item shall be that percentage which, when added to the percentage obtained under the second sen- tence of subsection (a)(1), equals 100 percent. (c) Gross amount For purposes of subsections (b)(1) and (2), the following items shall be taken into account: (I) Premiums The gross amount of premiums and other consideration (including advance premiums, deposits, fees, assessments, and consideration in respect of assuming liabilities under con- Page 503 § 809