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statutory formula, a minimum amount of net investment income that
a foreign insurance company, which is taxable under subchapter L,
part I, must treat as effectively connected to its conduct of an
insurance business in the United States (minimum ECNII). In
effect, a foreign insurance company engaged in business in the
United States would be taxable, under Internal Revenue Code
provisions in issue before us, on the greater of its actual
effectively connected net investment income (actual ECNII)
pursuant to section 842(a) or its minimum ECNII as determined by
the statutory formula.
4(...continued)
which is effectively connected with the conduct of an
insurance business within the United States shall be
not less than the product of--
(A) the required U.S. assets of such company, and
(B) the domestic investment yield applicable
to such company for such year.
Sec. 842(b)(5) defines net investment income for purposes of sec.
842(b) as follows:
Net investment income.--For purposes of this
subsection, the term "net investment income" means--
(A) gross investment income (within the
meaning of section 834(b)), reduced by
(B) expenses allocable to such income.
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