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TITLE 26-INTERNAL REVENUE CODE the taxable year shall be taken into account for purposes of this subpart as follows: (I) if the amount determined under sub- paragraph (A) exceeds the amount deter- mined under subparagraph (B), '/o of such excess shall be taken into account, for each of the succeeding 10 taxable years, as a net increase to which section 809(d)(2) applies; or (ii) if the amount determined under sub- paragraph (B) exceeds the amount deter- mined under subparagraph (A), io of such excess shall be taken into account for each of the 10 succeeding taxable years, as a net decrease to which section 809(c)(2) applies. (2) Termination as life insurance company Except as provided in section 381(c)(22) (re- lating to carryovers in certain corporate read- Justments), if for any taxable year the tax- payer is not a life insurance company, the balance of any adjustments under this para- graph shall be taken into account for the pre- ceding taxable year. (2) Effect of preliminary term election An election under section 818(c) shall not be treated as a change in the basis for deter- mining an item referred to in subsection (c) to which this subsection applies. If an election under section 818(c) applies for the taxable year, the amounts of the items referred to in subparagraphs (A) and (B) of paragraph (1) shall be determined without regard to such election. If such an election would apply in respect of such item for the taxable year but for the new basis, the amount of the item re- ferred to in subparagraph (B) shall be deter- mined on the basis which would have been applicable under section 818(c) if the election applied in respect of the item for the taxable year. (Added Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 125, and amended Pub. L. 91-172, title I, § 121(b)(5)(B), title IX, § 907(a)(2), Dec. 30, 1969, 83 Stat. 541, 715.) AMENDMENTS 1969-Subsec. (c). Pub. L. 91-172, §907(a)(2), added par. (6). Subsec. (e). Pub. L. 91-172, § 121(b)(5)(B), struck out subsec. (c), which dealt with certain decreases in re- serves of voluntary employees' beneficiary associ- ations. EFFECTIVE DATE OF 1969 AMENDMENT Amendment of subsec. (c) by section 907(a)(2) of Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1957, see section 907(d) of Pub. L. 91- 172, set out as an Effective Date of 1969 Amendment note under section 805 of this title. Repeal of subsec. (e) applicable to taxable years be- ginning after Dec, 31, 1969, see section 121(g) of Pub. L. 91-172, set out as an Effective Date of 1969 Amend- ment note under section 511 of this title. 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, 806, 809, 819, 1351 of this title. § 811. Dividends to policyholders (a) Dividends to policyholders defined For purposes of this part, the term "dividends to policyholders" means dividends and similar distributions to policyholders in thc~r capacity as such. Such term does not include interest paid (as defined in section 805(e)). (b) Amount of deduction (I) In general Except as limited by section 809(f), the de- duction for dividends to policyholders for any taxable year shall be an amount equal to the dividends to policyholders paid during the taxable year- (A) increased by the excess of (I) the amounts held at the end of the taxable year as reserves for dividends to policyholders (as defined in subsection (a)) payable during the year following the taxable year, over (iD such amounts held at the end of the preceding taxable year, or (B) decreased by the excess of (I) such amounts held at the end of the preceding taxable year, over (ii) such amounts held at the end of the taxable year. For purposes of subparagraphs (A) and (B), there shall be included as amounts held at the end of any taxable year amounts set aside, before the 16th day of the third month of the year following such taxable year (or, in the case of a mutual savings bank subject to the tax imposed by section 594, before the 16th day of the fourth month of the year fol- lowing such taxable year), for payment during the year following such taxable year. (2) Certain amounts to be treated as net decreases If the amount determined under paragraph (1)(B) exceeds the dividends to policyholders paid during the taxable year, the amount of such excess shall be a net decrease referred to in section 809(c)(2). (Added Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 126.) PRIOR PROVISIONS A prior section 811, act Aug. 16, 1954, ch. 736, § 811, as added Mar. 13, 1956, ch. 83, § 2, 70 Stat. 44, and amended July 24, 1956, ch. 696, § 2(c), 70 Stat. 633; Mar. 17, 1958, Pub. L. 85-345, § 2(c), 72 Stat. 37, im- posed a tax on the life insurance company taxable income of all life Insurance companies for taxable years beginning after Dec. 31, 1957 prior to the gener- al revision of this part by Pub. L. 86-69, § 2(a). 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 section 809 of this title. Page 507