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TITLE 26-INTERNAL REVENUE CODE (b) (other than paragraph (1)(D) thereof) and net premiums received. In the application of section 1212 for purposes of this section, the net capital loss for the taxable year shall be the amount by which losses for such year from sales or exchanges of capital assets ex- ceeds the sum of the gains from such sales or exchanges and whichever of the following amounts is the lesser: (A) the taxable investment income (com- puted without regard to gains or losses from sales or exchanges of capital assets); or (B) losses from the sale or exchange of capital assets sold or exchanged to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders. (7) Special deductions The special deductions allowed by part VIII (except section 248) of subchapter B (sec. 241 and following, relating to dividends received). In applying section 246(b) (relating to limita- tion on aggregate amount of deductions for dividends received) for purposes of this para- graph, the reference in such section to "tax- able income" shall be treated as a reference to "taxable investment income". (8) Trade or business deductions The deductions allowed by this subtitle (without regard to this part) which are attrib- utable to any trade or business (other than an insurance business) carried on by the insur- ance company, or by a partnership of which the insurance company is a partner; except that for purposes of this paragraph- (A) any item, to the extent attributable to the carrying on of the insurance business, shall not be taken into account, and (B) the deduction for net operating losses provided in section 172 shall not be allowed. (9) Depletion The deduction allowed by section 611 (relat- ing to depletion). d) Other applicable rules (1) Rental value of real estate The deduction under subsection (c)(3) or (4) on account of any real estate owned and occu- pied in whole or in part by a mutual insur- ance company subject to the tax imposed by section 821 shall be limited to an amount which bears the same ratio to such deduction (computed without regard to this paragraph) as the rental value of the space not so occu- pied bears to the rental value of the entire property. (2) Amortization of premium and accrual of dis- count The gross amount of income during the tax- able year from interest and the deduction provided in subsection (c)(1) shall each be de- creased to reflect the appropriate amortiza- tion of premium and increased to reflect the appropriate accrual of discount attributable to the taxable year on bonds, notes, deben- tures, or other evidences of Indebtedness held by a mutual insurance company subject to the tax imposed by section 821. Such amorti- zation and accrual shall be determined- (A) in accordance with the method regu. larly employed by such company, if such method is reasonable, and (B) in all other cases, in accordance with regulations prescribed by the Secretary. No accrual of discount shall be required under this paragraph on any bond (as defined in section 171(d). (3) Double deductions Nothing in this part shall permit the same item to be deducted more than once. (e) Definitions For purposes of this part- (1) Net premiums The term "net premiums" means gross pre- miums (including deposits and assessments) written or received on insurance contracts during the taxable year less return premiums and premiums paid or incurred for reinsur- ance. Amounts returned where the amount is not fixed in the insurance contract but de- pends on the experience of the company or the discretion of the management shall not be included in return premiums but shall be treated as dividends to policyholders under paragraph (2). (2) Dividends to policyholders The term "dividends to policyholders" means dividends and similar distributions paid or declared to policyholders. For pur- poses of the preceding sentence, the term "paid or declared" shall be construed accord- ing to the method regularly employed in keeping the books of the insurance company. (Aug. 16, 1954, ch. 736, 68A Stat. 261; Mar. 13, 1956, ch. 83, § 3(a)(3)-(8), 70 Stat. 47, 48; Oct. 16, 1962, Pub. L. 87-834, § 8(b), 76 Stat. 991; reb. 26, 1964, Pub. L. 88-272, title II, § 228(b)(2), 78 Stat. 99; Nov. 13, 1966, Pub. L. 89-809, title I, § 104(i)(5), 80 Stat. 1562; Oct. 4, 1976, Pub. L. 94-455, title XIX, §§ 1901(a)(105), (b)(1)(P)-(S), 1906(b)(13)(A), 90 Stat. 1782, 1792, 1834.) AMENDMENTS 1976-Subsec. (c)(2). Pub. L. 94-455, § 1901(b)(1)(P), struck out "partially tax-exempt interest and" before "dividends received allowed by". Subsec. (c)(5). Pub. L. 94-455, § 1901(a)(105)(A), struck out "(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)" following "purchase or carry obligations". Subsec. (c)(6)(A). Pub. L. 94-455, § 1901(b)(1)(Q), struck out "or to the deduction provided in section 242 for partially tax-exempt interest" following "ex- changes of capital assets". Subsec. (c)(7). Pub. L. 94-455, § 1901(b)(1)(R), struck out "partially tax-exempt interest and to" following "and following, relating to". Subsec. (d)(2). Pub. L. 94-455, §§ 1901(a)(105)(B), (b)(1)(S), 1906(b)(13)(A), struck out in subpar. (B) "or his delegate" following "Secretary" and substituted in provisions preceding subpar. (A) "and the deduction provided in subsection (c)(1)" for ", the deduction pro- vided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt inter- est)" and in provisions following subpar. (B) "No ac- crual" for "For taxable years beginning after Decem. ber 31, 1962, no accrual". 1966-Subsec. (e). Pub. L. 89-809 struck out former subsec, (e) dealing with foreign mutual insurance com. § 822 Page 524