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B. Formula
A foreign insurance company's minimum ECNII is the product
of the company's required U.S. assets and the domestic investment
yield (domestic yield). Sec. 842(b)(1). The required U.S.
assets of a company are determined by multiplying the mean of its
total insurance liabilities on its business within the United
States for the taxable year by the domestic asset/liability
percentage (asset/liability percentage) applicable to such
company for that year. Sec. 842(b)(2).5 The asset/liability
percentage is a ratio, the numerator of which is the mean of the
assets of domestic insurance companies and the denominator of
5Sec. 842(b)(2) provides:
(2) Required U.S. assets.--
(A) In general.--For purposes of paragraph (1),
the required U.S. assets of any foreign company for any
taxable year is an amount equal to the product of--
(i) the mean of such foreign company's total
insurance liabilities on United States business, and
(ii) the domestic asset/liability percentage
applicable to such foreign company for such year.
(B) Total insurance liabilities.--For purposes of
this paragraph--
(i) Companies taxable under part I.--In the
case of a company taxable under part I, the term
"total insurance liabilities" means the sum of the
total reserves (as defined in section 816(c)) plus
(to the extent not included in total reserves) the
items referred to in paragraphs (3),(4),(5), and
(6) of section 807(c).
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