# 26 U.S.C. § 817A: Special rules for modified guaranteed contracts Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 817A(a)(1). ## § 817A(a) Computation of reserves In the case of a modified guaranteed contract, clause (ii) of section 807(e)(1)(A) shall not apply. ## § 817A(b) Segregated assets under modified guaranteed contracts marked to market **§ 817A(b)(1) In general.** In the case of any life insurance company, for purposes of this subtitle— **§ 817A(b)(1)(A)** Any gain or loss with respect to a segregated asset shall be treated as ordinary income or loss, as the case may be. **§ 817A(b)(1)(B)** If any segregated asset is held by such company as of the close of any taxable year— **§ 817A(b)(1)(B)(i)** such company shall recognize gain or loss as if such asset were sold for its fair market value on the last business day of such taxable year, and **§ 817A(b)(1)(B)(ii)** any such gain or loss shall be taken into account for such taxable year. Proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account under the preceding sentence. The Secretary may provide by regulations for the application of this subparagraph at times other than the times provided in this subparagraph. **§ 817A(b)(2) Segregated asset.** For purposes of paragraph (1), the term “segregated asset” means any asset held as part of a segregated account referred to in subsection (d)(1) under a modified guaranteed contract. ## § 817A(c) Special rule in computing life insurance reserves For purposes of applying section 816(b)(1)(A) to any modified guaranteed contract, an assumed rate of interest shall include a rate of interest determined, from time to time, with reference to a market rate of interest. ## § 817A(d) Modified guaranteed contract defined For purposes of this section, the term “modified guaranteed contract” means a contract not described in section 817— **§ 817A(d)(1)** all or part of the amounts received under which are allocated to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the company and is valued from time to time with reference to market values, **§ 817A(d)(2)** which— **§ 817A(d)(2)(A)** provides for the payment of annuities, **§ 817A(d)(2)(B)** is a life insurance contract, or **§ 817A(d)(2)(C)** is a pension plan contract which is not a life, accident, or health, property, casualty, or liability contract, **§ 817A(d)(3)** for which reserves are valued at market for annual statement purposes, and **§ 817A(d)(4)** which provides for a net surrender value or a policyholder’s fund (as defined in section 807(e)(1)). If only a portion of a contract is not described in section 817, such portion shall be treated for purposes of this section as a separate contract. ## § 817A(e) Regulations The Secretary may prescribe regulations— **§ 817A(e)(1)** to provide for the treatment of market value adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B), **§ 817A(e)(2)** to determine the interest rates applicable under sections 807(c)(3) and 807(d)(2)(B) with respect to a modified guaranteed contract annually, in a manner appropriate for modified guaranteed contracts and, to the extent appropriate for such a contract, to modify or waive the applicability of section 811(d), **§ 817A(e)(3)** to provide rules to limit ordinary gain or loss treatment to assets constituting reserves for modified guaranteed contracts (and not other assets) of the company, **§ 817A(e)(4)** to provide appropriate treatment of transfers of assets to and from the segregated account, and **§ 817A(e)(5)** as may be necessary or appropriate to carry out the purposes of this section. ## Regulations - [Treas. Reg. § 1.817A-0](/26/reg/1.817A-0.md): Table of contents. (interprets § 817A) - [Treas. Reg. § 1.817A-1](/26/reg/1.817A-1.md): Certain modified guaranteed contracts. (interprets § 817A) ## Final rules - [87 FR 18697](https://www.federalregister.gov/documents/2022/03/31/2022-06881/income-taxes) (2022): Income Taxes - [85 FR 64386](https://www.federalregister.gov/documents/2020/10/13/2020-20144/computation-and-reporting-of-reserves-for-life-insurance-companies) (2020): Computation and Reporting of Reserves for Life Insurance Companies - [68 FR 24349](https://www.federalregister.gov/documents/2003/05/07/03-11211/guidance-under-section-817a-regarding-modified-guaranteed-contracts) (2003): Guidance Under Section 817A Regarding Modified Guaranteed Contracts ## Connections Cites: § 807 Rules for certain reserves; § 811 Accounting provisions; § 816 Life insurance company defined; § 817 Treatment of variable contracts Cited by: none ## Amendments - 1996-08-20: [Pub. L. 104-188](/26/act/104-188.md), 110 Stat. 1846 - 2017-12-22: [Pub. L. 115-97](/26/act/115-97.md), 131 Stat. 2148