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131 STAT. 2234 PUBLIC LAW 115–97—DEC. 22, 2017 (C) Subparagraph (B) of section 6655(e)(2) is amended by adding at the end the following new clause: ‘‘(iii) MODIFIED TAXABLE INCOME.—The term ‘modi- fied taxable income’ has the meaning given such term by section 59A(c)(1).’’. (e) EFFECTIVE DATE.—The amendments made by this section shall apply to base erosion payments (as defined in section 59A(d) of the Internal Revenue Code of 1986, as added by this section) paid or accrued in taxable years beginning after December 31, 2017. PART III—OTHER PROVISIONS SEC. 14501. RESTRICTION ON INSURANCE BUSINESS EXCEPTION TO PASSIVE FOREIGN INVESTMENT COMPANY RULES. (a) IN GENERAL.—Section 1297(b)(2)(B) is amended to read as follows: ‘‘(B) derived in the active conduct of an insurance business by a qualifying insurance corporation (as defined in subsection (f)),’’. (b) QUALIFYING INSURANCE CORPORATION DEFINED.—Section 1297 is amended by adding at the end the following new subsection: ‘‘(f) QUALIFYING INSURANCE CORPORATION.—For purposes of subsection (b)(2)(B)— ‘‘(1) IN GENERAL.—The term ‘qualifying insurance corpora- tion’ means, with respect to any taxable year, a foreign corpora- tion— ‘‘(A) which would be subject to tax under subchapter L if such corporation were a domestic corporation, and ‘‘(B) the applicable insurance liabilities of which con- stitute more than 25 percent of its total assets, determined on the basis of such liabilities and assets as reported on the corporation’s applicable financial statement for the last year ending with or within the taxable year. ‘‘(2) ALTERNATIVE FACTS AND CIRCUMSTANCES TEST FOR CER- TAIN CORPORATIONS.—If a corporation fails to qualify as a quali- fied insurance corporation under paragraph (1) solely because the percentage determined under paragraph (1)(B) is 25 percent or less, a United States person that owns stock in such corpora- tion may elect to treat such stock as stock of a qualifying insurance corporation if— ‘‘(A) the percentage so determined for the corporation is at least 10 percent, and ‘‘(B) under regulations provided by the Secretary, based on the applicable facts and circumstances— ‘‘(i) the corporation is predominantly engaged in an insurance business, and ‘‘(ii) such failure is due solely to runoff-related or rating-related circumstances involving such insur- ance business. ‘‘(3) APPLICABLE INSURANCE LIABILITIES.—For purposes of this subsection— ‘‘(A) IN GENERAL.—The term ‘applicable insurance liabilities’ means, with respect to any life or property and casualty insurance business— ‘‘(i) loss and loss adjustment expenses, and 26 USC 1297. 26 USC 26 note. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00182 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS