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TITLE 26-INTERNAL REVENUE CODE of computing such reserves is approved by the Secretary, except that if, pursuant to an elec- tion made for a taxable year beginning in 1958, the basis adopted is the basis provided in para- graph (2), the taxpayer may adopt the basis provided by paragraph (1) for its first taxable year beginning after 1958. (d Short taxable years If any return of a corporation made under this part is for a period of less than the entire calendar year (referred to in this subsection as "short period"), then section 443 shall not apply in respect of such period, but- (1) the taxable investment income and the gain or loss from operations shall be deter- mined, under regulations prescribed by the Secretary, on an annual basis by a ratable daily projection of the appropriate figures for the short period, (2) that portion of the life insurance compa- ny taxable income described in paragraphs (1) and (2) of section 802(b) shall be determined on an annual basis by treating the amounts ascertained under paragraph (1) as the tax- able investment income and the gain or loss from operations for the taxable year, and (3) that portion of the life insurance compa- ny taxable income described in paragraphs (1) and (2) of section 802(b) for the short period shall be the amount which bears the same ratio to the amount ascertained under para- graph (2) as the number of days in the short period bears to the number of days in the entire calendar year. (e) I)enial of double deductions Nothing in this part shall permit the same item to be deducted more than once under sub- part B and once under subpart C. (f) Computation on consolidated returns of policy- holders' share of investment yield For purposes of this part. in the case of a life insurance company filing or required to file a consolidated return under section 1501 for a taxable year, the computations of the policy- holders' share of investment yield under sub- parts B and C (including all determinations and computations incident thereto) shall be made as if such company were not filing a consolidat- ed return. (Added Pub. L. 86-69, § 2(a), June 25, 1959, 73 Stat. 133, and amended Pub. L. 88-272, title I, § 228(b)(1), Feb. 26, 1964, 78 Stat. 98; Pub. L. 91- 688, § l(a), Jan. 12, 1971, 84 Stat. 2072; Pub. L. 94-455, title XIX, §§ 1901(a)(101), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1781, 1834.) PRIOR Pnov'SIONS A prior section 818, act Aug. 16, 1954, ch. 736, § 818, as added Mar. 13, 1956, ch. 83, § 2, 70 Stat. 46, related to certain new insurance companies prior to the gener- al revision of this part by Pub. L. 86-69, § 2(a). AMENDMENTS 1976-Subsecs. (a)(2), (b)(l)iBI, (d)(1). Pub, L. 94- 455, § 1906(b)(13)(A), struck out "or his delegate" fol- lowing "Secretary". Subsec. (e). Pub. L. 94-455, § 1901(a)(101), redesig- nated former subsec. (f) as (e). Former subsec. (0), which related to a transitional rule for changes in method of accounting, was struck out. Subsec. (f). Pub. L. 94-455, § 1901(a)(101), redesignat- ed former subsec. (g) as (f). Former subsec. (f) redesig. nated (e). Subsec. (g). Pub. L. 94-455, § 1901(a)(101), redesig- nated subsec. (g) as (f). 1971-Subsee. (g). Pub. L. 91-688 added subsec. (g). 1964-Subsec. (b)(3). Pub. L. 88-272 added par. (3). EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs. (e), (f), (g) by section 1901(a)(1l01) effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94- 455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. EFFECTIVE DATE OF 1971 AMENDMENT Section 1(b) of Pub. L. 91-688 provided that: "The amendment made by subsection (a) [enacting subsec. (g) of this section] shall apply with respect to taxable years beginning after December 31, 1957." 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. ELECTION TO FILE SEPARATE RETURNS Section 2 of Pub. L. 91-688 provided that: "(a) If- "(1) any insurance company subject to taxation under section 802 of the Internal Revenue Code of 1954 [section 802 of this title] filed a consolidated return under section 1501 of such Code [section 1501 of this title] for any taxable year beginning after December 31, 1957, and ending before March 13, 1969, and "(2) not later than one year after the date of the enactment of this Act [Jan. 12, 1971] "(A) such company elects (in such manner as the Secretary of the Treasury or his delegate may pre- scribe) to have this section apply, "(B) such company files consents to the applica- tion ef this section of all companies which at any time during any taxable year beginning after De- cember 31, 1957, and ending before March 13, 1969, were members of the same affiliated group as such company, and "(C) such company (and each company referred to in subparagraph (1)) files a separate return for the first taxable year beginning after December 31, 1957, for which such company filed a consoli- dated return and for each taxable year thereafter ending before the date of, the enactment of this Act Jan. 12, 19711, then not withstanding any law or rule of law the requirement of filing a consoli- dated return shall be replaced by a requirement of separate returns for each company referred to in paragraph (2)(C) for each taxable year to which paragraph (2)(C) applies with respect to such com- pany. Paragraph (2)(C) shall not apply with re- spect to any company for any taxable year the allowance of a credit for which is barred on the date of the enactment of this Act [Jan. 12, 1971], by res judicata or through the operation of section 7121 or section 7122 of the Internal Revenue Code of 1954 [section 7121 or 7122 of this title]. "(b) If the making or allowance of any refund or credit, or the assessment of any deficiency, of income tax for any taxable year to which subsection (a)(2)(C) applies is prevented before the expiration of 2 years after the date of the enactment of this Act [Jan. 12, 1971] by any law or rule of law (other than sections 7121 and 7122 of such Code and other than res Judi- cata), such refund or credit may nevertheless be made or allowed, and such deficiency may nevertheless be assessed, at any time before the expiration of such 2- year period, but only to the extent that the overpay- ment or deficiency is attributable to an election made under this section. No interest shall be allowed on any Page 515 § 818