Page:United States Statutes at Large Volume 100 Part 3.djvu/1090

 100 STAT. 2898

PUBLIC LAW 99-514—OCT. 22, 1986 (b) CLARIFICATION OF PREFERENCE CUTBACKS.—

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(1) Paragraph (4) of section 291(a) (relating to 20-percent reduction in certain preference items, etc.) is amended to read as follows: "(4) CERTAIN FSC INCOME.—In the case of taxable years beginning after December 31, 1984, section 923(a) shall be applied with respect to any FSC by substituting— "(A) '30 percent' for '32 percent' in paragraph (2), and "(B) '15/23' for ' i % 3 ' in paragraph (3). If all of the stock in the FSC is not held by 1 or more C corporations throughout the taxable year, under regulations, proper adjustments shall be made in the application of the preceding sentence to take into account stock held by persons other than C corporations." (2) Subparagraph (F) of section 995(b)(1) (relating to deemed distributions from a DISC) is amended— (A) by inserting "in the case of a shareholder which is a C corporation," before "one-seventeenth" in clause (i), and (B) by striking out "the amount determined under clause (i)" in clause (ii) and inserting in lieu thereof "Vn of the excess referred to in clause (i),". (3) Subsection (a) of section 923 (defining exempt foreign trade income) is amended by adding at the end thereof the following new paragraph:

••'"-" "(6) CROSS REFERENCE.—

"For reduction in amount of exempt foreign trade income, see section 291(a)(4)." (c) TREATMENT OF FOREIGN TRADE INCOME UNDER SUBPART F. —

(1) Subsection O3) of section 952 (relating to exclusion of United States income) is amended by adding at the end thereof .|^ the following new sentence: "For purposes of the preceding sentence, income described in paragraph (2) or (3) of section 921(d) shall be treated as derived from sources within the (2) Paragraph (1) of section 951(e) is amended by striking out the last sentence. (d) DIVIDENDS RECEIVED DEDUCTION FOR CERTAIN DISTRIBUTIONS FROM A FSC— >,.,, ,v (1) DEDUCTION FOR CERTAIN DIVIDENDS.— ' ^ "^^^ •
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(A) Paragraph (1) of section 245(c) (relating to certain .' dividends received from FSC) is amended to read as follows: "(1) IN GENERAL.—In the case of a domestic corporation, there shall be allowed as a deduction an amount equal to— "(A) 100 percent of any dividend received by such corporation from another corporation which is distributed out of earnings and profits attributable to foreign trade income for a period during which such other corporation was a "(B) 85 percent of any dividend received by such corpora..^ ^ tion from another corporation which is distributed out of ' ' • earnings and profits attributable to qualified interest and carrying charges received or accrued by such other corporation while such other corporation was a FSC. ^ J The deduction allowable under the preceding sentence with ]*; respect to any dividend shall be in lieu of any deduction allowable under subsection (a) or (b) with respect to such dividend."
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