Page:United States Statutes at Large Volume 100 Part 3.djvu/523

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2331

alternative minimum taxable income but is taken into account in determining the amount of earnings and profits— "(I) such amount shall be included in income in the same manner as if such amount were includible in gross income for purposes of computing alternative minimum taxable income, and "(II) the amount of such income shall be reduced by any deduction which would have been allowable in computing alternative minimum taxable income if such amount were includible in gross income, "(ii) INCLUSION OF BUILDUP IN LIFE INSURANCE CON-

TRACTS.—In the case of any life insurance contract— "(I) the income on such contract (as determined under section 7702(g)) for any taxable year shall be treated as includible in gross income for such year, and "(II) there shall be allowed as a deduction that portion of any premium which is attributable to insurance coverage, "(iii) INCLUSION OF INCOME ON ANNUITY CONTRACT.— In the case of any annuity contract, the income on such contract (as determined under section 72(u)(2)) shall be treated as includible in gross income for such year. "(C) DISALLOWANCE OF ITEMS NOT DEDUCTIBLE IN COMPUTING EARNINGS AND PROFITS.—

"(i) IN GENERAL.—A deduction shall not be allowed for any item if such item would not be deductible for any taxable year for purposes of computing earnings and profits. "(ii)

SPECIAL RULE FOR IOO-PERCENT DIVIDENDS.—

Clause (i) shall not apply to any deduction allowable under section 243 or 245 for a 100-percent dividend— "(I) if the corporation receiving such dividend and the corporation paying such dividend could not be members of the same affiliated group under section 1504 by reason of section 1504(b), "(II) but only to the extent such dividend is attributable to income of the paying corporation which is subject to tax under this chapter (determined after the application of sections 936 and 921). For purposes of the preceding sentence, the term '100 percent dividend' means any dividend if the percentage used for purposes of determining the amount allowable as a deduction under section 243 or 245 with respect to such dividend is 100 percent. "(iii) SPECIAL RULE FOR DIVIDENDS FROM SECTION 936 COMPANIES.—In the case of any dividend received from a corporation eligible for the credit provided by section 936, rules similar to the rules of subparagraph (F) of subsection (f)(1) shall apply, except that '75 percent' shall be substituted for '50 percent' in clause (ii)(I) thereof. "(D) CERTAIN OTHER EARNINGS AND PROFITS ADJUSTMENTS.—

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