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contained in both the Senate bill and in the accompanying Senate
Finance Committee report.
The Senate bill contained the following provision:
(B) Reserve Strengthening After March 1, 1986.--
* * * [the fresh start provision] shall not apply to
any reserve strengthening reported for Federal income
tax purposes after March 1, 1986, for a taxable year
beginning before January 1, 1987, and such
strengthening shall be treated as occurring in the
taxpayer's 1st taxable year beginning after December
31, 1986. The preceding sentence shall not apply to
the computation of reserves on any contract if such
computation employs the reserve practice used for
purposes of the most recent annual statement filed on
or before March 1, 1986, for the type of contract with
respect to which such reserves are set up. [H.R. 3838,
99th Cong., 2d Sess., sec. 1022(e)(3)(B), as reported
by the Senate Finance Committee on May 29, 1986.]
The Finance Committee report stated that "reserve
strengthening" consisted of "any adjustments to reserves that are
attributable to changes in reserves on account of changes in the
basis for computing reserves (i.e., reserve strengthening or
reserve weakening) in a taxable year beginning before January 1,
1987". S. Rept. 99-313, supra at 510, 1986-3 C.B. (Vol. 3) at
510.
The differences between the House and Senate versions of
H.R. 3838 were reconciled by the conference committee. The final
bill adopted by the conference committee and enacted into law did
not define "reserve strengthening". It provided as follows:
(B) Reserve Strengthening In Years After 1985.--
* * * [the fresh start provision] shall not apply to
any reserve strengthening in a taxable year beginning
in 1986, and such strengthening shall be treated as
occurring in the taxpayer's 1st taxable year beginning
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