Bill > S991

This bill aims to prevent insurance companies from avoiding taxes by using reinsurance arrangements with affiliated companies that are not subject to U.S. taxes. Specifically, it introduces new rules to the Internal Revenue Code of 1986 that will require insurance companies to include certain income from reinsurance with these non-taxed affiliates in their taxable income. This means that premiums paid to these affiliates for reinsurance, as well as any related payments or recoveries, will be considered taxable income for the original insurance company. The bill defines "non-taxed reinsurance premium" as a premium paid to an affiliated corporation for reinsurance of risks, where the income from that premium isn't taxed in the U.S. An "affiliated corporation" is broadly defined to include companies within a certain ownership threshold, even if that threshold is lower than the standard definition. Importantly, the bill also allows for an election where a foreign affiliated corporation can choose to treat its reinsurance income as effectively connected with a U.S. trade or business, making it subject to U.S. taxation, and potentially allowing for deductions for reinsurance premiums paid. This provision is intended to ensure that income generated from these reinsurance arrangements is properly taxed in the United States, and it applies to taxable years beginning after December 31, 2013.