Connecticut General Life Insurance Company - Page 10

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            capacity to write insurance) could use nonlife losses to reduce                              
            income of affiliated life companies.  Congress anticipated that                              
            the option to consolidate nonlife and life companies would, in                               
            particular, improve the financial condition of P&C insurance                                 
            companies.  See S. Rept. 94-938, at 454-455 (1976), 1976-3 C.B.                              
            (Vol. 3) 49, 492-493.                                                                        
                  Congress, however, in order to minimize trafficking by                                 
            profitable life insurance companies in unprofitable P&C insurance                            
            companies, provided certain rules and limitations on the use in                              
            consolidated Federal income tax returns of nonlife losses to                                 
            reduce life income.  See S. Rept. 94-938, supra at 454-455, 1976-                            
            3 C.B. (Vol. 3) at 492-493; 122 Cong. Rec. 24680-24685 (1976).                               
                  Section 1503(c)(1) provides generally that where an election                           
            is made under section 1504(c)(2) to include both nonlife and life                            
            companies in a consolidated Federal income tax return, certain                               
            losses of nonlife companies may be taken into account and may                                
            reduce income of the life companies included in the return but                               
            only pursuant to regulations prescribed by the Secretary.  Sec.                              
            1503(c)(1).                                                                                  
                  Section 1503(c)(1) also provides that nonlife losses must                              
            first be carried back against prior year income of the particular                            
            nonlife companies that incurred the losses, and nonlife losses                               
            that are not absorbed as carrybacks against prior year income of                             
            the nonlife companies may be applied against income of the life                              
            companies to the extent of only 35 percent of the nonlife CNOL or                            




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Last modified: May 25, 2011