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TITLE 26-INTERNAL REVENUE CODE to 826 of this title, amending sections 501, 821, 822, 832, 841, 1016 and 1201 of this title, and redesignating former section 823 of this title as section 822(f) of this title] (other than by subsection (f) [adding subsec. (c) of section 831 of this title]) shall apply with respect to taxable years beginning after December 31, 1962." EFFECTIVE DATE OF 1956 AMENDMENT Section 6 of act Mar. 13, 1956, provided that: "The amendments made by this Act Ito part I, of this sub- chapter as it existed prior to June 25, 1959 and to sec- tions 316(b)(1), 501(c)(15), 594(a)(2), 821, 822(b). (c)(3), (6), (8), (9), (d)(1), (e), 832(b)(4), (c)(5), (8), 841, 842, 843, 891, 1201(a), 1504(b)(2), and 4371(2) of this title] shall apply only to taxable years beginning after De- cember 31, 1954." SHORT TITLE Congress in enacting amendments to part I of this subchapter as it existed prior to June 25, 1959 and to sections 316(b)(1). 501(c)(15), 594(a)(2), 821. 822(b), (c), (3), (6), (8). (9), (d)(1), (e), 832(b)(4), (c)(5), (8), 841, 842, 891, 1201(a), 1504(b)(2), and 4371(2) of this title, and adding section 843 of this title, provided by sec- tion 1 of act Mar. 13, 1956, that they shall be popular- ly known as the "Life Insurance Company Tax Act for 1955". CROSS REFERENCES Alternative tax, see section 1201 of this title. Burial or funeral benefit insurance company as tax. able under this section or section 831, see section 801 of this title. Consolidated returns, includible corporation defined to mean insurance companies taxable under this sec- tion, see section 1504 of this title. Credit for foreign taxes, see section 841 of this title. Dividends defined in distributions by corporations, see section 316 of this title. Doubling tax rates on citizens and corporations of certain foreign countries, see section 891 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 243. 801, 822, 823, 824, 825, 826, 831, 841, 891, 1201, 1504, 1563 of this title. § 822. Determination of taxable investment income (a) Definitions For purposes of this part- (1) The term "taxable investment income" means the gross investment income, minus the deductions provided in subsection (c). (2) The term "investment loss" means the amount by which the deductions provided in subsection (W) exceed the gross investment income. (b) Gross investment income For purposes of subsection (a), the term "gross investment income" means the sum of the following: (1) The gross amount of income during the taxable year from- (A) interest, dividends, rents, and royal- ties, (B) the entering into of any lease, mort- gage, or other instrument or agreement from which the insurance company derives interest, rents, or royalties, (C) the alteration or termination of any instrument or agreement described in sub- paragraph (B), and (D) gains from sales or exchanges of cap- ital assets to the extent provided in sub- chapter P (see. 1201 and following, relating to capital gains and losses). (2) The gross income during the taxable year from any trade or business (other than an insurance business) carried on by the in. surance company, or by a partnership of which the insurance company is a partner. In computing gross income under this para- graph, there shall be excluded any item de- scribed in paragraph (1). (c) Deductions In computing taxable investment income, the following deductions shall be allowed: (1) Tax-free interest The amount of interest which under section 103 is excluded for the taxable year from gross income. (2) Investment expenses Investment expenses paid or accrued during the taxable year. If any general expenses are in part assigned to or included in the invest- ment expenses, the total deduction under this paragraph shall not exceed one-fourth of 1 percent of the mean of the book value of the invested assets held at the beginning and end of the taxable year plus one-fourth of the amount by which taxable investment income (computed without any deduction for invest- ment expenses allowed by this paragraph, for tax-free interest allowed by paragraph (1), or for dividends received allowed by paragraph (7)), exceeds 3% percent of the book value of the mean of the invested assets held at the beginning and end of the taxable year. (3) Real estate expenses Taxes (as provided in section 164), and other expenses, paid or accrued during the taxable year exclusively on or with respect to the real estate owned by the company. No de- duction shall be allowed under this paragraph for any amount paid out for new buildings, or for permanent improvements or betterments made to increase the value of any property. (4) Depreciation The depreciation deduction allowed by sec- tion 167. (5) Interest paid or accrued All interest paid or accrued within the tax- able year on indebtedness, except on indebt- edness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from taxation under this sub- title. (6) Capital losses Capital losses to the extent provided in sub- chapter P (sec. 1201 and following) plus losses from capital assets sold or exchanged in order to obtain funds to meet abnormal insurance losses and to provide for the payment of divi- dends and similar distributions to policy- holders. Capital assets shall be considered as sold or exchanged in order to obtain funds to meet abnormal insurance losses and to pro- vide for the payment of dividends and similar distributions to policyholders to the extent that the gross receipts from their sale or e:*:- change are not greater than the excess, Li any, for the taxable year of the sum of divi- dends and similar distributions paid to policy- holders, losses paid, and expenses paid over the sum of the items described in subsection Page 523 § 822