business activity test

  • One of the three tests a company must meet to determine if it will be taxed as a life insurance company. It requires that the company must be engaged in the business of issuing or reinsuring life insurance and annuity contracts or noncancelable contracts of health and accident insurance.

    Internal Revenue Service 1

1Internal Revenue Service, Internal Revenue Manual 4.42.6 Glossary, http://­www.irs.gov/­irm/­part4/­irm_04-042-006.html (last accessed Dec. 22, 2009).