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TITLE 26-INTERNAL REVENUE CODE 242 for partially tax-exempt interest" following "ex- changes of capital assets". Subsec. (c)(12). Pub. L. 94-455, § 1901(b)(1)(U), struck out "partially tax-exempt interest and to" fol- lowing "and following, relating to". Subsec. (e)(2). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". 1974-Subsec. (e)(6). Pub. L. 93-483 added subsec. (e)(6). 1968-Subsec. (b)(1). Pub. L. 90-240. § 5(a), added subpar. (E). Subsec. c) Pub. L. 90-240, § 5(b), aided par. (13). Subsec. (e). Pub. L. 90-240, § 5(c), added subsec. (e). 1966-Subsec. (d). Pub. L. 89-809 struck out subsec. (d) having reference to the taxable income of foreign Insurance companies other than life or mutual and foreign mutual marine and redesignated subsec. (e) a. subsec. (o,. Subsec. (e). Pub. L. 89-809 redesignated subsec. (e) as subsec. d). 1964-Subset. (c)(10). Pub. L. 88-272 inserted the ref- erence to part I of subchapter D. 1962-Subsec. (b)(1)(C). Pub. L. 87-834. § 8(e)(3), (5), substituted "section 831(a)(3)(A)" for "section 831(a)". Subsec. (b)(1)(D). Pub. L. 87-834, §8(e)(5), added subsec. (b)(1)CD). Subsec. (b)(4). Pub. L. 87-834, § 8(e)(2), inserted pro- visions defining unearned premiums of mutual fire or flood Insurance companies, and which require premi- ums paid by the subscriber of a mutual flood insur. ance company to be treated, for purposes of comput- ing the taxable income of such subscriber, in the same manner as premiums paid by a policyholder to a mutual fire insurance company referred to in par. (3) of section 831(a) of this title. Subsec. (c)( 11). Pub. L. 87-834, § 8(e)(4), substituted "section 831(a)(3)(A)" for "section 831(a)", and insert- ed the definition of "dividends and similar distribu- tions". 1956-Subsec. (b)(4). Act Mar. 13, 1956. § 3(b)(1), sub- stituted "section 801(b)" for "section 806". Subsec, (c). Act Mar. 13, 1956, § 3(b)(2), (3), substitut- ed "the items described In section 822(b) (other than paragraph (1)(D) thereof) and net premiums received. In the application of section 1212" for "interest, divi- dends, rents, and net premiums received. In the appli- cation of section 1211" in par. (5), and authorized the deduction for depletion in par. (8). EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsecs. (b)(1), (6), (c)(5)(A), (12) by section 1901(a)(108), (b)(1)(T), (U) of Pub. L. 94-455 effective for taxable years beginning after Dec. 3), 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under sec- tion 2 of this title. EFFECTIVE DATE OF 1968 AMENDMENT Section 5(e) of Pub. L. 90-240 provided that: "The amendments made by subsections Ca), (b), (c), and (d) [amending sections 381(c)(22), 832 of this title] shall apply to taxable years beginning after December 31, 1966, except that so much of section 832(e)(2) of the Internal Revenue Code of 1954 (subsee. (e)(2) of this section] (as added by the amendment made by subsec- tion (c)) as provides for payment of interest and penal- ties for failure to make a timely purchase of tax and loss bonds shall not apply with respect to any period during which such bonds are not available for pur- chase." 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 OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug. 16, 1954, see section 228(d) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 809 of this title, EFFECTIVE DATE OF 1962 AMENDMENT Amendment of subsecs. (b)(1), (4) and (c)(11) by Pub. L. 87-834 applicable with respect to taxable years beginning 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. EFFECTIVE DATE OF 1956 AMENDMENT Amendment of subsecs. (b)(4), (c) by act Mar. 13, 1956, applicable only to taxable years beginning after Dec. 31, 1954, see section 6 of act Mar. 13, 1956, set out as an Effective Date of 1956 Amendment note under section 821 of this title. TREATMENT AS UNEARNED PREMIUMS OF ADDITIONS TO RESERVES REQUIRED BY STATE LAW OR REGULATIONS FOR MORTGAGE GUARANTY INSURANCE LOSSES Section 5(g) of Pub. L. 90-240 provided that: "(1) In the case of taxable years beginning before 1967, a company shall treat additions to a reserve, re- quired by State law or regulations for mortgage guar- anty insurance losses resulting from adverse economic cycles, as unearned premiums for purposes of section 832(b)(4) of the Internal Revenue Code of 1954 (subsec. (b)(4) of this section], but the amount so treated as unearned premiums In a taxable year shall not exceed 50 percent of premiums earned nn Insur- ance contracts (as defined in section 832(b)(4) of such Code (subsec. (b)(4) of this section]), determined with- out regard to amounts added to the reserve, with re- spect to mortgage guaranty insurance for such year. The amount of unearned premiums at the close of 1966 shall be determined without regard to the preced- ing sentence for the purpose of applying section 832(b)(4) of such Code [subsec. (b)(4) of this section] to 1967. Additions to such a reserve shall not be treat- ed as unearned premiums for any taxable year begin- ning after 1966. "(2) If a mortgage guaranty insurance company made additions to a reserve which were so treated as unearned premiums described in paragraph (1), such company, in taxable years beginning after 1966, shall include in gross income (in addition to the items speci- fied in section 832(b)(1) of such Code subsec. (b)(1) of this section]) the sum of the following amounts until there is included in gross income an amount equal to the aggregate additions to the reserve described in paragraph (1) for taxable years beginning before 1967: "CA) an amount (if any) equal to the excess of losses incurred (as defined in sectian 832(b)(5) of such Code [subsec. (b)(5) of this section]) for the taxable year over 35 percent of premiums earned on insurance contracts during the taxable year (as de- fined in section 832(b)(4) of such Code [subsec. (b)(4) of this section)), determined without regard to amounts added to the reserve referred to in para- graph (1), with respect to mortgage guaranty insur- ance, '(B) the amount (if any) remaining which was added to the reserve for the tenth preceding taxable year, and "(C) the excess (if any) of- "Ci) the aggregate of amounts so treated as un- earned premiums for all taxable years beginning before 1967 less the total of the amounts included in gross income under this paragraph for prior tax- able years and the amounts included in gross income under subparagraphs (A) and (B) for the taxable year, over "(ii) the aggregate of the additions made for tax- able years beginning before 1967 which remain in the reserve at the close of the taxable year. 71-999 0 - 78 - 36 (Vol, 7) Page 533 § 832