Life Insurance Controlled Group [Internal Revenue] Law and Legal Definition

Pursuant to 26 CFR 1.1563-1 (5) (i) [Title 26 Internal Revenue; Chapter I Internal Revenue Service, Department of the Treasury; Subchapter A Income Tax; Part 1 Income Taxes; Consolidated Returns; Related Rules; Certain Controlled Corporations], the term Life Insurance Controlled Group means “two or more life insurance companies each of which is a member of a controlled group of corporations described in paragraph (a)(2), (a)(3)(i), or (a)(4) of this section and to which § 1.1502-47(f)(6) does not apply. Such insurance companies shall be treated as a controlled group of corporations separate from any other corporations which are members of a controlled group described in such paragraph (a)(2), (a)(3)(i), or (a)(4) of this section. For purposes of this section, the common parent of the controlled group described in paragraph (a)(2) of this section shall be referred to as the common parent of the life insurance controlled group.

(ii) Examples. The following examples illustrate the definition of a life insurance controlled group. In these examples, L indicates a life company, another letter indicates a nonlife company and each corporation uses the calendar year as its taxable year:

Example 1. Since January 1, 1999, corporation P has owned all the stock of corporations L [1] and Y, and L [1] has owned all the stock of corporation X. On January 1, 2005, Y acquired all of the stock of corporation L [2]. Since L [1] and L [2] are members of a parent-subsidiary controlled group of corporations, such companies are treated as members of a life insurance controlled group separate from the parent-subsidiary controlled group consisting of P, X and Y. For purposes of this section, P is referred to as the common parent of the life insurance controlled group even though P is not a member of such group.

Example 2. The facts are the same as in Example 1, except that, beginning with the 2005 tax year, the P affiliated group elected to file a consolidated return and P made a section 1504(c)(2) [26 USCS § 1504(c)(2)] election. Pursuant to paragraph (a)(5)(i) of this section, L [1] and L [2] are not members of a separate life insurance controlled group. Instead, P, X, Y, L [1] and L [2] constitute one controlled group. See § 1.1502-47(f)(6).”