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TITLE 26-INTERNAL REVENUE CODE () Offset defined For purposes of subsection (e), the term "offset" means with respect to any taxable year (hereinafter referred to as the "offset year")- (1) in the case of an unused loss carryback from the loss year to the offset year, the mutual insurance company taxable income for the offset year; or (2) in the case of an unused loss carryover from the loss year to the offset year, an amount equal to the sum of- (A) the amount required to be subtracted from the protection against loss account under section 824(d)(1)(C) for the offset year, plus (B) the mutual insurance company tax- able income for the offset year. For purposes of paragraphs (1) and (2)(B), the mutual insurance company taxable income for the offset year shall be determined without regard to any unused loss carryback or car- ryover from the loss year or any taxable year thereafter. (g) Limitations For purposes of this part, an unused loss shall not be carried- (1) except as provided by section 844, to or from any taxable year for which the insur- ance company is not subject to the tax im- posed by section 821(a), nor (2) except as provided by section 844, to any taxable year if, between the loss year and such taxable year, there is an intervening tax- able year for which the insurance company was not subject to the tax imposed by section 821(a). (Added Pub. L. 87-834, § 98(c), Oct. 16, 1962, 76 Stat. 995, and amended Pub. L. 91-172 title IX, §907(c)(2)(C), (D), Dec. 30, 1969, 83 Stat. 717; Pub. L. 94-455, title VIII, § 806(d)(2), title XIX, § 1901(a)(106), Oct. 4, 1976, 90 Stat. 1599, 1782.) AMEND MENTS 1976-Subsec. (d). Pub. L. 94-455, § 806(d)(2), among other changes, added requirement that unused loss carryovers for a taxable year ending after Dec. 31, 1975 shall be an unused loss carryover for each of the 7 taxable years following the loss year and provision relating to election of unused loss carrybacks. Subsec. (g). Pub. L. 94-455, § 1901(a)(106), redesig- nated former pars. (2) and (3) as (1) and (2). Former par. (1), which related to the prohibition of an unused loss carried to or from any taxable year beginning before Jan. 1, 1963, was struck out. 1969-Subsec. (g)(2), (3). Pub. L. 91-172 provided that section 844 of this title be excepted from the non- allowable carryover provisions of this section. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (d) by section 806(d)(2) of Pub. L. 94-455 applicable to losses incurred in taxable years ending after Dec. 31, 1975, see section 806(g)(1) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 172 of this title. Amendment of subsec. (g) by section 1901(a)(106) of Pub. L. 94-455 effective for taxable years ending 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 1969 AMENDMENT Amendment by section 907(c)(2)(C), (D) of Pub. L. 91-172 applicable with respect to losses incurred in taxable year beginning after Dec. 31, 1962, but not af- fecting any tax liability for any taxable year begin- ning before Jan. 1, 1967, see section 907(d) of Pub. L. 91-172, set out as an Effective Date of 1969 Amend- ment note under section 805 of this title. EFFECTIVE DATE Section applicable with respect to taxable years be- ginning after Dec. 31, 1962, see section 8(h) of Pub. L. 87-834, set out as an Effective Date of 1962 Amend- ment note under section 821 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section Is referred to in sections 821, 844 of this title. § 826. Election by reciprocal (a) In general Except as otherwise provided in this section. any mutual insurance company which is an in- terinsurer or reciprocal underwriter (herein- after in this section referred to as a "recipro- cal") subject to the taxes imposed by section 821(a) may, under regulations prescribed by the Secretary, elect to be subject to the limitation provided in subsection (b). Such election shall be effective for the taxable year for which made and for all succeeding taxable years, and shall not be revoked except with the consent of the Secretary. (b) Limitation The deduction for amounts paid or incurred in the taxable year to the attorney-in-fact by a reciprocal making the election provided in sub- section (a) shall be limited to, but in no case in- creased by, the deductions of the attorney-in- fact allocable, in accordance with regulations prescribed by the Secretary, to the income re- ceived by the attorney-in-fact from the recipro- cal. (c) Exception An election may not be made by a reciprocal under subsection (a) unless the attorney-in-fact of such reciprocal- (1) is subject to the taxes imposed by sec- tion 11(b) and (c); (2) consents in such manner as the Secre- tary shall prescribe by regulations to make available such information as may be re- quired during the period in which the elec- tion provided in subsection (a) is in effect, under regulations prescribed by the Secre- tary; (3) reports the income received from the re- ciprocal and the deductions allocable thereto under the same method of accounting under which the reciprocal reports deductions for amounts paid to the attorney-in-fact; and (4) files its return on the calendar year basis. (d) Special rule In applying section 824(d)(1)(D), any amount which was added to the protection against loss account by reason of an election under this sec- tion shall be treated as having been added by reason of section 824(a)(1)(A). (e) Credit Any reciprocal electing to be subject to the limitation provided in subsection (b) shall be credited with so much of the tax paid by the at- torney-in-fact as is attributable, under regula- tions prescribed by the Secretary, to the Page 528 § 826