Title 26 — Internal Revenue CodeRelease 119-73
§845 Certain reinsurance agreements
Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter L— - Insurance Companies › Part PART III— - PROVISIONS OF GENERAL APPLICATION › § 845
Summary
The Secretary can reassign tax items among related parties to a reinsurance agreement. If a contract causes significant tax avoidance, the Secretary can adjust a party’s tax treatment, even treating the contract as ended on December 31 and restarted on January 1 each year. "Related persons" means taxpayers connected under section 482.
Full Legal Text
Title 26, §845
Internal Revenue Code — Source: USLM XML via OLRC
(a)In the case of 2 or more related persons (within the meaning of section 482) who are parties to a reinsurance agreement (or where one of the parties to a reinsurance agreement is, with respect to any contract covered by the agreement, in effect an agent of another party to such agreement or a conduit between related persons), the Secretary may—
(1)allocate between or among such persons income (whether investment income, premium, or otherwise), deductions, assets, reserves, credits, and other items related to such agreement,
(2)recharacterize any such items, or
(3)make any other adjustment,
(b)If the Secretary determines that any reinsurance contract has a significant tax avoidance effect on any party to such contract, the Secretary may make proper adjustments with respect to such party to eliminate such tax avoidance effect (including treating such contract with respect to such party as terminated on December 31 of each year and reinstated on January 1 of the next year).
Legislative History
Notes & Related Subsidiaries
Editorial Notes
Amendments
2004—Subsec. (a). Pub. L. 108–357 substituted “amount, source, or character” for “source and character” in concluding provisions.
Statutory Notes and Related Subsidiaries
Effective Date
of 2004 Amendment Pub. L. 108–357, title VIII, § 803(b), Oct. 22, 2004, 118 Stat. 1569, provided that: “The
Amendments
made by this section [amending this section] shall apply to any risk reinsured after the date of the enactment of this Act [Oct. 22, 2004].”
Effective Date
Pub. L. 98–369, div. A, title II, § 217(d),
July 18, 1984, 98 Stat. 762, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) Subsection (a) of section 845 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by this title) shall apply with respect to any risk reinsured on or after
September 27, 1983. “(2) Subsection (b) of section 845 of such Code (as so added) shall apply with respect to risks reinsured after
December 31, 1984.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 845
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73