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131 STAT. 2147 PUBLIC LAW 115–97—DEC. 22, 2017 (1) Section 808 is amended by adding at the end the fol- lowing new subsection: ‘‘(g) PREVAILING STATE ASSUMED INTEREST RATE.—For purposes of this subchapter— ‘‘(1) IN GENERAL.—The term ‘prevailing State assumed interest rate’ means, with respect to any contract, the highest assumed interest rate permitted to be used in computing life insurance reserves for insurance contracts or annuity contracts (as the case may be) under the insurance laws of at least 26 States. For purposes of the preceding sentence, the effect of nonforfeiture laws of a State on interest rates for reserves shall not be taken into account. ‘‘(2) WHEN RATE DETERMINED.—The prevailing State assumed interest rate with respect to any contract shall be determined as of the beginning of the calendar year in which the contract was issued.’’. (2) Paragraph (1) of section 811(d) is amended by striking ‘‘the greater of the prevailing State assumed interest rate or applicable Federal interest rate in effect under section 807’’ and inserting ‘‘the interest rate in effect under section 808(g)’’. (3) Subparagraph (A) of section 846(f)(6) is amended by striking ‘‘except that’’ and all that follows and inserting ‘‘except that the limitation of subsection (a)(3) shall apply, and’’. (4) Section 848(e)(1)(B)(iii) is amended by striking ‘‘807(e)(4)’’ and inserting ‘‘807(e)(3)’’. (5) Subparagraph (B) of section 954(i)(5) is amended by striking ‘‘shall be substituted for the prevailing State assumed interest rate,’’ and inserting ‘‘shall apply,’’. (c) EFFECTIVE DATE.— (1) IN GENERAL.—The amendments made by this section shall apply to taxable years beginning after December 31, 2017. (2) TRANSITION RULE.—For the first taxable year beginning after December 31, 2017, the reserve with respect to any con- tract (as determined under section 807(d) of the Internal Rev- enue Code of 1986) at the end of the preceding taxable year shall be determined as if the amendments made by this section had applied to such reserve in such preceding taxable year. (3) TRANSITION RELIEF.— (A) IN GENERAL.—If— (i) the reserve determined under section 807(d) of the Internal Revenue Code of 1986 (determined after application of paragraph (2)) with respect to any con- tract as of the close of the year preceding the first taxable year beginning after December 31, 2017, differs from (ii) the reserve which would have been determined with respect to such contract as of the close of such taxable year under such section determined without regard to paragraph (2), then the difference between the amount of the reserve described in clause (i) and the amount of the reserve described in clause (ii) shall be taken into account under the method provided in subparagraph (B). (B) METHOD.—The method provided in this subpara- graph is as follows: 26 USC 807 note. 26 USC 808. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00095 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS