- 39 -
Section 845, which was enacted as section 212(a) of the
Deficit Reduction Act of 1984 (DEFRA), Pub. L. 98-369, 98 Stat.
494, 757, provides:
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).
2. Lack of Regulations Under Section 845(b)
Petitioner argues that respondent may not rely on section
845(b) because she has not prescribed regulations thereunder.
Petitioner argues that section 845(b), without regulations,
Page: Previous 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 NextLast modified: May 25, 2011