### Question
How does the law define prorated amounts?


### Answer
Under *26 U.S.C. § 805*, **prorated amounts** is defined as:

> tax-exempt interest, the increase for the taxable year in policy cash values (within the meaning of subparagraph (F)) of life insurance policies and annuity and endowment contracts to which section 264(f) applies, and dividends other than 100 percent dividends

#### Citation:
  - *26 U.S.C. § 805*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter L-Insurance Companies > PART I-LIFE INSURANCE COMPANIES > Subpart C-Life Insurance Deductions**

