(1) Where an insurance company first applies such accounting standards prescribed by Presidential Decree as the Korean International Financial Reporting Standards for the insurance business (hereafter in this Article referred to as international financial reporting standards for insurance contracts"), the amount calculated by applying the formula prescribed by Presidential Decree to liability reserves (referring to liability reserves prescribed in the Insurance Business Act; hereafter in this Article the same shall apply) included in deductible expenses for the business year immediately preceding the business year for which the international financial reporting standards for insurance contracts are first applied (hereafter in this Article referred to as "business year of first application") shall be included in gross income for the purpose of calculating the amount of income for the business year of first application.
(2) An insurance company shall include an amount, which is calculated by applying the formula prescribed by Presidential Decree to liability reserves appropriated according to the accounting standards referred to in Article 120 (3) of the Insurance Business Act as of the start date of the business year of first application, in deductible expenses for the purpose of calculating the amount of income for the relevant business year.
(3) Notwithstanding paragraph (1), an insurance company may choose not to include in gross income an amount (limited to where the amount is a positive number; hereafter in this Article referred to as "converted profit") calculated by applying the formula prescribed by Presidential Decree to the amount obtained by subtracting the amount prescribed in paragraph (2) from the amount prescribed in paragraph (1) for the purpose of calculating the amount of income for the business year of first application and the subsequent three business years. In such cases, the converted profits shall be equally divided over the three years from the start date of the fourth business year following the business year of first application and shall be included in gross income.
(4) Where an insurance company is dissolved (excluding dissolution due to a qualified merger prescribed in Article 44 (2) and (3) or a qualified division prescribed in Article 46 (2)) during the period prescribed in paragraph (3), any converted profit not included in gross income shall be included in gross income for the purpose of calculating the amount of income for the business year in which the registration date of dissolution falls.
(5) Article 32 shall not apply to an insurance company to which paragraph (3) applies, irrespective of the period referred to in the same paragraph.
(6) The application for non-inclusion of converted profits in gross income and the inclusion of such profits in gross income in equal division, and other necessary matters shall be prescribed by Presidential Decree.[This Article Added on Dec. 31, 2022]