### Question
How is the "applicable financial statement" defined?


### Answer
The term **applicable financial statement** is defined in *26 U.S.C. § 1297* as follows -

> a statement for financial reporting purposes which—


(i) is made on the basis of generally accepted accounting principles,


(ii) is made on the basis of international financial reporting standards, but only if there is no statement that meets the requirement of clause (i), or


(iii) except as otherwise provided by the Secretary in regulations, is the annual statement which is required to be filed with the applicable insurance regulatory body, but only if there is no statement which meets the requirements of clause (i) or (ii)

#### Citation:
  - *26 U.S.C. § 1297*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART VI-TREATMENT OF CERTAIN PASSIVE FOREIGN INVESTMENT COMPANIES > Subpart D-General Provisions**

