The North West Life Assurance Company of Canada - Page 16

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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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Last modified: May 25, 2011