Page:United States Statutes at Large Volume 100 Part 3.djvu/1091

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2899

(B) Paragraph (3) of section 245(c) (relating to definitions) is simended by adding at the end thereof the following new sentence: "For purposes of this subsection, the term 'qualified interest and carrying charges' means any interest or carrying charges (as defined in section 927(d)(l)) derived from a transaction which results in foreign trade income." j,^ (2) SEPARATE APPLICATION OF SECTION 904.—Subparagraph (D) of section 904(d)(l) is amended to read as follows: "(D) distributions from a FSC (or a former FSC) out of earnings and profits attributable to foreign trade income (within the meaning of section 923(b)) or qualified interest •,^ and carrying charges (as defined in section 245(c)), and". (3) (COORDINATION OF SECTIONS 906 AND 902.—Subsection 0)) of

I section 906 (relating to nonresident alien individuals and for.. \ eign corporations) is amended by adding at the end thereof the following new paragraph: ., "(6) For purposes of section 902, any income, war profits, and excess profits taxes paid or accrued (or deemed paid or accrued) to any foreign country or possession of the United States with respect to income effectively connected with the conduct of a _^, trade or business within the United States shall not be taken into account, and any accumulated profits attributable to such income shall not be taken into account." (e) EXCHANGE OF INFORMATION REQUIREMENTS.—

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(1) Paragraph (3) of section 927(e) (relating to exchange of information requirements) is amended— (A) by striking out "unless, at the same time such corporation was created or organized, there was" and inserting in lieu thereof "unless there is", (B) by striking out "section 274(h)(6)(C)" in subparagraph (A) and inserting in lieu thereof "section 274(h)(6)(C) (determined by treating any reference to a beneficiary country as being a reference to any foreign country and by applying such section without regard to clause (ii) thereof", and (C) by amending subparagraph (B) to read as follows:

"(B) an income tax treaty which contains an exchange of information program— "(i) which the Secretary certifies (and has not revoked such certification) is satisfactory in practice for purposes of this title, and "(ii) to which the FSC is subject." (2) Effective for periods after March 28, 1985, paragraph (2) of section 924(c) (relating to requirement that FSC be managed outside the United States) is amended to read as follows: "(2) the principal bank account of the corporation is maintained in a foreign country which meets the requirements of section 927(e)(3) or in a possession of the United States at all times during the taxable year, and".

(f) COORDINATION WITH POSSESSIONS TAXATION.—

(1) Paragraph (5) of section 927(e) (relating to exemption from certain other taxes) is amended to read EIS follows: "(5) COORDINATION WITH POSSESSIONS TAXATION.—

"(A) EXEMPTION.—No tax shall be imposed by any possession of the United States on any foreign trade income derived before January 1, 1987. The preceding sentence shall not apply to any income attributable to the sale of

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