
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC845]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
                    Subchapter L--Insurance Companies
 
               PART III--PROVISIONS OF GENERAL APPLICATION
 
Sec. 845. Certain reinsurance agreements


(a) Allocation in case of reinsurance agreement involving tax avoidance 
        or evasion

    In the case of 2 or more related persons (within the meaning of 
section 482) who are parties to a reinsurance agreement (or where one of 
the parties to a reinsurance agreement is, with respect to any contract 
covered by the agreement, in effect an agent of another party to such 
agreement or a conduit between related persons), the Secretary may--
        (1) allocate between or among such persons income (whether 
    investment income, premium, or otherwise), deductions, assets, 
    reserves, credits, and other items related to such agreement,
        (2) recharacterize any such items, or
        (3) make any other adjustment,

if he determines that such allocation, recharacterization, or adjustment 
is necessary to reflect the proper source and character of the taxable 
income (or any item described in paragraph (1) relating to such taxable 
income) of each such person.

(b) Reinsurance contract having significant tax avoidance effect

    If the Secretary determines that any reinsurance contract has a 
significant tax avoidance effect on any party to such contract, the 
Secretary may make proper adjustments with respect to such party to 
eliminate such tax avoidance effect (including treating such contract 
with respect to such party as terminated on December 31 of each year and 
reinstated on January 1 of the next year).

(Added Pub. L. 98-369, div. A, title II, Sec. 212(a), July 18, 1984, 98 
Stat. 757.)


                             Effective Date

    Section 217(d) of title II of div. A of Pub. L. 98-369, as amended 
by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(1) Subsection (a) of section 845 of the Internal Revenue Code of 
1986 [formerly I.R.C. 1954] (as added by this title) shall apply with 
respect to any risk reinsured on or after September 27, 1983.
    ``(2) Subsection (b) of section 845 of such Code (as so added) shall 
apply with respect to risks reinsured after December 31, 1984.''
