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TITLE 26-INTERNAL REVENUE CODE 9 percent in lieu of the percentage determined and proclaimed by the Secretary. 1966-Subsec. (a). Pub. L. 89-809, § 104()(3)(A) to (D), struck out former subsec. (a), which rendered tax- able the business of a foreign life insurance company carrying on a life insurance business within the United States in the same manner as a domestic life insurance company if, with respect to its United States business, it would qualify as a life insurance company under sec- tion 801, redesignated subsec. (b) as subsec. (a), and, in subsec. (a) as so redesignated, substituted "In the case of any foreign corporation taxable under this part" for "In the case of any company described in subsec- tion (a)," in par. (1), "subsection (b)" for "subsection (c)" in par. (2), and added par. (3). Subsec. (b). Pub. L. 89-809, § 104(i)(3)(A), (E) to (H), redesignated subsec. (c) as subsec. (b), and, in subsec. (b) as so redesignated, substituted "with respect to a foreign corporation" for "for purposes of subsection (a)", "foreign corporation" for "foreign life insurance company", and "subsection (a)C2)(A)" for "subsection (b)(2)(A)" wherever appearing, and, in par. (2)(B)(1i), substituted "subsection (a)(2)(B)" for "subsection (b)(2)(B)". Former subsec. (b) redesignated as subsec. (a). Subsec. (c). Pub, L. 89-809, § 104()(3)(A), (I), added subsec. (c). Former subsec. (c) redesignated as subsec. (b). Subsec. (d). Pub. L. 89-809, § 104(i)(3)(A), struck out subsec. (d) which provided that foreign life insurance companies not carrying on an insurance business within the United States shall not be taxable under this part but shall be taxable as other foreign corpora- tions. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(2)(A), (b)(2)(B)(1) by sec- tion 1901(a)(102) of Pub. L. 94-455 effective for tax- able 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 1966 AMENDMENT Amendment by Pub. L. 89-809 applicable with re- spect to taxable years beginning after Dec, 31, 1966, see section 104(n) of Pub. L. 89-809, set out as an Ef- fective Date of 1966 Amendment note under section 11 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 section 4371 of this title. § 819A. Contiguous country branches of domestic life insurance companies (a) Exclusion of items In the case of a domestic mutual insurance company which- (1) is a life insurance company, (2) has a contiguous country life insurance branch, and (3) makes the election provided by subsec- tion (g) with respect to such branch, there shall be excluded from each and every item involved in the determination of life insur- ance company taxable income the items sepa- rately accounted for in accordance with subsec- tion (c). (b) Contiguous country life insurance branch For purposes of this section, the term "con- tiguous country life insurance branch" means a branch which- (1) issues insurance contracts insuring risks in connection with the lives or health of resi- dents of a country which is contiguous to the United States, (2) has its principal place of business in such contiguous country, and (3) would constitute a mutual life insurance company if such branch were a separate do- mestic insurance company. For purposes of this section, the term "insur- ance contract" means any life, health, accident, or annuity contract or reinsurance contract or any contract relating thereto. (c) Separate accounting required Any taxpayer which makes the election pro- vided by subsection (g) shall establish and maintain a separate account for the various income, exclusion, deduction, asset, reserve, li- ability, and surplus items properly attributable to the contracts described in subsection (b). Such separate accounting shall be made- (1) in accordance with the method regularly employed by such company, if such method clearly reflects income derived from, and the other items attributable to, the contracts de- scribed in subsection (b), and (2) in all other cases, in accordance with regulations prescribed by the Secretary. (d) Recognition of gain on assets in branch account If the aggregate fair market value of all the invested assets and tangible property which are separately accounted for by the domestic life insurance company in the branch account es- tablished pursuant to subsection (c) exceeds the aggregate adjusted basis of such assets for purposes of determining gain, then the domes- tic life insurance company shall be treated as having sold all such assets on the first day of the first taxable year for which the election is in effect at their fair market value on such first day. Notwithstanding any other provision of this chapter, the net gain shall be recognized to the domestic life insurance company on the deemed sale described in the preceding sen- tence. (e) Transaction between contiguous country branch and domestic life insurance company (1) Reimbursement for home office services, etc. Any payment, transfer, reimbursement, credit, or allowance which is made from a sep- arate account established pursuant to subsec- tion (c) to one or more other accounts of a do- mestic life insurance company as reimburse- ment for costs incurred for or with respect to the insurance (or reinsurance) of risks ac- counted for in such separate account shall be taken into account by the domestic life insur- ance company in the same manner as if such payment, transfer, reimbursement, credit, or allowance had been received from a separate person. (2) Repatriation of income (A) In general Except as provided in subparagraph (B), any amount directly or indirectly trans- 71-999 0 - 78 - 35 (Vol. 7) Page 517 § 819A