Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 67-36

1967-1 C.B. 176

Sec. 812

IRS Headnote

A company which was authorized to do business as a fire and casualty insurance company more than 5 years prior to the taxable year in which it qualified as a life insurance company and in which it had a loss from operations was not a `new company' for such loss year within the meaning of section 812(e) of the Internal Revenue Code of 1954 and therefore is entitled to a 5-year carryover of its operations loss from such taxable year rather than the 8-year carryover provided by section 812(b)(1)(A)(iii) of the Code.

Full Text

Rev. Rul. 67-36

Advice has been requested whether a life insurance company was a `new company' for the taxable year 1965 for purposes of section 812(b) of the Internal Revenue Code of 1954, relating to operations loss carrybacks and carryovers, under the following circumstances.

The taxpayer was organized on January 1, 1959, and was authorized on that date to do business as a stock fire and casualty insurance company. For the years 1959 through 1964, the taxpayer was subject to tax under section 831 of the Code as an insurance company other than life or mutual.

On December 31, 1965, the taxpayer qualified as a `life insurance company' within the meaning of section 801 of the Code. The taxpayer had a loss from operations for the taxable year 1965.

Section 812(b)(1)(A) of the Code provides as follows:

(b) OPERATIONS LOSS CARRYBACKS AND CARRYOVERS.-

(1) YEARS TO WHICH LOSS MAY BE CARRIED.-

(A) IN GENERAL.-The loss from operations for any taxable year (hereinafter in this section referred to as the `loss year') beginning after December 31, 1954, shall be-

(i) an operations loss carryback to each of the 3 taxable years preceding the loss year,

(ii) an operations loss carryover to each of the 5 taxable years following the loss year, and

(iii) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in clause (ii).

Section 812(e) of the Code provides as follows:

(e) NEW COMPANY DEFINED.-For purposes of this part, a life insurance company is a new company for any taxable year only if such taxable year begins not more than 5 years after the first day on which it (or any predecessor, if section 381(c)(22) applies or would have applied if in effect) was authorized to do business as an insurance company . (Emphasis added.)

In the instant case, the taxpayer first qualified as a life insurance company in 1965, the year in which it had a loss from operations. However, the taxpayer was first authorized to do business `as an insurance company' on January 1, 1959.

Accordingly, the taxpayer in the instant case was not a `new company' for the taxable year 1965 within the meaning of section 812(e) of the Code and therefore is entitled to a 5-year carryover of its 1965 operations loss rather than the 8-year carryover provided by section 812(b)(1)(A)(iii) of the Code.