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Title 26 — Internal Revenue CodeRelease 119-73

§811 Accounting Provisions

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter L— Insurance Companies › Part I— LIFE INSURANCE COMPANIES › Subpart D— Accounting, Allocation, and Foreign Provisions › § 811

Last updated Apr 6, 2026|Official source

Summary

Life insurance companies must figure their taxes using the accrual method of accounting, or a mix of accrual and another allowed method if regulations permit, but never the simple cash method. They must adjust their income and deductions each year for premium and discount on bonds and other debt they hold, using their own regular method if it is reasonable. Bond premium is figured as if the company had elected to amortize it, and premium tied to a bond's conversion feature does not count. A company cannot set up a reserve for an item unless the related premiums are counted in its income, and it cannot count the same item twice or deduct anything more than once. Interest credited under a contract at a rate above the required rate, if guaranteed beyond year-end, gets special treatment. If a return covers less than a full calendar year, taxable income is figured by projecting the short period's numbers over a full year on a daily basis.

Full Legal Text

Title 26, §811

Internal Revenue Code — Source: USLM XML via OLRC

(a)All computations entering into the determination of the taxes imposed by this part shall be made—
(1)under an accrual method of accounting, or
(2)to the extent permitted under regulations prescribed by the Secretary, under a combination of an accrual method of accounting with any other method permitted by this chapter (other than the cash receipts and disbursements method).
(b)(1)The appropriate items of income, deductions, and adjustments under this part shall be adjusted to reflect the appropriate amortization of premium and the appropriate accrual of discount attributable to the taxable year on bonds, notes, debentures, or other evidences of indebtedness held by a life insurance company. Such amortization and accrual shall be determined—
(A)in accordance with the method regularly employed by such company, if such method is reasonable, and
(B)in all other cases, in accordance with regulations prescribed by the Secretary.
(2)(A)In the case of any bond (as defined in section 171(d)), the amount of bond premium, and the amortizable bond premium for the taxable year, shall be determined under section 171(b) as if the election set forth in section 171(c) had been made.
(B)In no case shall the amount of premium on a convertible evidence of indebtedness include any amount attributable to the conversion features of the evidence of indebtedness.
(3)No accrual of discount shall be required under paragraph (1) on any bond (as defined in section 171(d)), except in the case of discount which is—
(A)interest to which section 103 applies, or
(B)original issue discount (as defined in section 1273).
(c)Nothing in this part shall permit—
(1)a reserve to be established for any item unless the gross amount of premiums and other consideration attributable to such item are required to be included in life insurance gross income,
(2)the same item to be counted more than once for reserve purposes, or
(3)any item to be deducted (either directly or as an increase in reserves) more than once.
(d)For purposes of this part (other than section 816), amounts in the nature of interest to be paid or credited under any contract for any period which is computed at a rate which—
(1)exceeds the interest rate in effect under section 808(g) for the contract for such period, and
(2)is guaranteed beyond the end of the taxable year on which the reserves are being computed,
(e)If any return of a corporation made under this part is for a period of less than the entire calendar year (referred to in this subsection as “short period”), then section 443 shall not apply in respect to such period, but life insurance company taxable income shall be determined, under regulations prescribed by the Secretary, on an annual basis by a ratable daily projection of the appropriate figures for the short period.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 811, added Pub. L. 86–69, § 2(a),
June 25, 1959, 73 Stat. 126; amended Pub. L. 97–248, title II, § 255(b)(1), Sept. 3, 1982, 96 Stat. 533; Pub. L. 98–369, div. A, title VII, § 714(a),
July 18, 1984, 98 Stat. 960, related to dividends to policyholders, prior to the general revision of this part by Pub. L. 98–369, § 211(a). Another prior section 811, act Aug. 16, 1954, ch. 736, § 811, as added Mar. 13, 1956, ch. 83, § 2, 70 Stat. 44; amended
July 24, 1956, ch. 696, § 2(c), 70 Stat. 633; Mar. 17, 1958, Pub. L. 85–345, § 2(c), 72 Stat. 37, imposed a tax on the life insurance company taxable income of all life insurance companies for taxable years beginning after Dec. 31, 1957, prior to the general revision of this part by Pub. L. 86–69, § 2(a).

Amendments

2017—Subsec. (d)(1). Pub. L. 115–97 substituted “the interest rate in effect under section 808(g)” for “the greater of the prevailing State assumed interest rate or applicable Federal interest rate in effect under section 807”. 1988—Subsec. (d)(1). Pub. L. 100–647 substituted “the greater of the prevailing State assumed interest rate or applicable Federal interest rate in effect under section 807 for the contract” for “the prevailing State assumed interest rate for the contract”. 1984—Subsec. (b)(3). Pub. L. 98–369, § 42(a)(8), substituted “section 1273” for “section 1232(b)”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2017 AmendmentAmendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, with transition rule and transition relief, see section 13517(c) of Pub. L. 115–97, set out as a note under section 807 of this title.

Effective Date

of 1988 AmendmentAmendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100–203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100–647, set out as a note under section 56 of this title.

Effective Date

of 1984 AmendmentAmendment by section 42(a)(8) of Pub. L. 98–369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98–369, set out as an

Effective Date

note under section 1271 of this title.

Effective Date

Section applicable to taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 98–369, set out as a note under section 801 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 811

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73