(3) The underwriting profit of such company on such insurance written within the United States shall be determined by deducting from the net earned premiums on such marine insurance written within the United States during the taxable year, meaning thereby the calendar year next preceding the date on which such tax is due, the following items:—

1. (a) Net losses incurred, meaning thereby gross losses incurred during such calendar year on such marine insurance written within the United States, less reinsurance claims collected or collectible and less all net salvages and all recoveries collected or collectible from any source during such calendar year on such losses and on losses deducted under this section in any prior year.
2. (b) Net expenses incurred, meaning thereby expenses incurred during such calendar year on such marine insurance written within the United States, including all state and federal taxes in connection therewith; but in no event shall the aggregate amount of such net expenses deducted exceed forty per cent of the net premiums on such marine insurance ascertained as hereinafter provided; and
3. (c) Net dividends paid or credited to policyholders or insureds during such calendar year on such marine insurance written within the United States.

(5) In determining the amount of such tax, net expenses incurred shall be determined as the sum of the following:

1. (a) Specific expenses incurred directly and specifically in connection with such marine insurance, including all commissions, agency expenses, taxes, licenses, fees, and loss-adjustment expenses, less recoveries or reimbursements on account of or in connection with such commissions or other expenses collected or collectible because of reinsurance or from any other source; and
2. (b) General expenses incurred on such marine insurance, consisting of that proportion of general or overhead expenses incurred in connection with such insurance which the net premiums on such marine insurance written by such company during the taxable year bear to the total net premiums from all classes of insurance written by it during the taxable year. Within the meaning of this paragraph, general or overhead expenses shall include salaries of officers and employees, printing and stationery, all taxes imposed by the commonwealth and the United States, except as included in paragraph (a) of this subsection, and all other expenses of such company not included in said paragraph (a), after deducting expenses and taxes specifically chargeable to any or all other classes of insurance.

(6) In determining the amount of the tax payable under subsection (1), the taxable underwriting profit, if any, of such company on all such marine insurance written within the commonwealth shall be ascertained as follows:—

1. (a) In the case of every such company which has written any such business within the commonwealth during three calendar years immediately preceding the year in which such taxes are payable, the taxable underwriting profit shall be determined by adding or subtracting, as the case may be, the underwriting profit or loss on all such insurance written within the United States, ascertained as hereinbefore provided, for each of such three years, and dividing by three.

2. (b) In the case of every such company other than as specified in paragraph (a) of this subsection, such taxable underwriting profit, if any, shall be the underwriting profit, if any, on such marine insurance business written within the commonwealth during the taxable year, ascertained as hereinbefore provided; but after such company has written such marine insurance business within the commonwealth during three calendar years, an adjustment shall be made on the three year average basis by ascertaining the amount of tax payable in accordance with paragraph (a) of this subsection. Any tax credit resulting from such adjustment may be refunded without interest upon written application at the time of filing the required return, or applied toward the payment of any tax due or which may thereafter become due.

   [There is no subsection (7).]