[Code of Federal Regulations]
[Title 26, Volume 8]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.832-6]

[Page 748]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Determination of Tax Liability--Table of Contents
 
Sec. 1.832-6  Policyholders of mutual fire or flood insurance companies 
operating on the basis of premium deposits.

    For purposes of determining his taxable income for any taxable year, 
a taxpayer insured by a mutual fire or flood insurance company under a 
policy for which the premium deposit is the same regardless of the 
length of the term for which the policy is written, and who is entitled 
to have returned or credited to his on the cancellation or expiration of 
such policy the unabsorbed portion of the premium deposit not required 
for losses, expenses, or establishment of reserves, may, if such amount 
is otherwise deductible under this chapter, deduct so much of his 
premium deposit as was absorbed by the company during the taxpayer's 
taxable year. The amount of the premium deposit absorbed during the 
taxpayer's taxable year shall be determined in accordance with the 
schedule of unabsorbed premium deposit returns in effect for the company 
during such taxable year. If the taxpayer is unable to determine the 
applicable rate of absorption in effect during his taxable year, he 
shall compute his deduction on the basis of the rate of absorption in 
effect at the end of the company's taxable year which next preceded the 
end of the taxpayer's taxable year. In such a case, an appropriate 
adjustment will be made upon the final determination of the rate of 
absorption applicable to the taxable year.

[T.D. 6681, 28 FR 11130, Oct. 17, 1963]