Understanding Life Insurance Controlled Group [Internal Revenue]: A Comprehensive Guide
Definition & Meaning
The term life insurance controlled group refers to a specific classification of two or more life insurance companies that are part of a controlled group of corporations. According to the Internal Revenue Code, these companies must meet certain criteria outlined in the regulations. Specifically, they are defined as members of a controlled group described in sections (a)(2), (a)(3)(i), or (a)(4) of the regulations, and they are treated as a separate controlled group distinct from any other corporations in the same controlled group.
Legal Use & context
This term is primarily used in tax law and corporate law. Understanding the concept of a life insurance controlled group is essential for compliance with tax regulations, especially when filing consolidated tax returns. It can impact how taxes are calculated and reported for affiliated companies. Users may find relevant legal forms and templates through US Legal Forms to assist with compliance and reporting requirements.
Real-world examples
Here are a couple of examples of abatement:
Example 1: Corporation P owns all stock of life insurance companies L1 and L2. If L1 also owns a non-life company X, and L2 is acquired by another company, L1 and L2 will still be treated as a separate life insurance controlled group.
Example 2: If Corporation P decides to file a consolidated return, L1 and L2 will no longer be treated as a separate life insurance controlled group, but rather as part of the larger controlled group that includes P, X, and others. (hypothetical example)
Relevant laws & statutes
The definition and treatment of life insurance controlled groups are primarily governed by the Internal Revenue Code, specifically:
- 26 CFR 1.1563-1: Defines controlled groups and their tax implications.
- Section 1504: Outlines rules for consolidated returns and affiliated groups.