Page:United States Statutes at Large Volume 100 Part 3.djvu/715

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2523

interest derived from financing the sale (or other disposition) for use or consumption outside the United States of any property— "(i) which is manufactured, produced, grown, or extracted in the United States by the taxpayer or a related person, and value of which is attributable to products imported into the United States. For purposes of clause (ii), the fair market value of any property imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 (19 U.S.C. 1401a) in connection with its importation. "(H) RELATED PERSON.—For purposes of this paragraph, the term 'related person' has the meaning given such term by section 954(d)(3), except that such section shall be applied by substituting 'the person with respect to whom the determination is being made' for 'controlled foreign corporation' each place it appears.
 * '(ii) not more than 50 percent of the fair market

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as r t ch-

"(I) TRANSITIONAL RULE.—For purposes of paragraph (1)—

"(i) taxes paid or accrued in a taxable year beginning before January 1, 1987, with respect to income which was described in subparagraph (A) of paragraph (1) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) shall be treated as taxes paid or accrued with respect to income described in subparagraph (A) of paragraph (1) (as in effect after such date), "(ii) taxes paid or accrued in a taxable year beginning before January 1, 1987, with respect to income which was described in subparagraph (E) of paragraph (1) (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) shall be treated as taxes paid or accrued with respect to income described in subparagraph (I) of paragraph (1) (as in effect after such date) except to the extent that— "(I) the taxpayer establishes to the satisfaction of the Secretary that such taxes were paid or accrued "' with respect to shipping income, or "(II) in the case of an entity meeting the requirements of subparagraph (C)(ii), the taxpayer establishes to the satisfaction of the Secretary that such > taxes were paid or accrued with respect to finannl - ^ cial services income, and "(iii) taxes paid or accrued in a taxable year begin3>c* ill- u ning before January 1, 1987, with respect to income described in any other subparagraph of paragraph (1) -rr • (as so in effect before such date) shall be treated as ri, taxes paid or accrued with respect to income described in the corresponding subparagraph of paragraph (1) (as r so in effect after such date). "(3) LOOK-THRU IN CASE OF CONTROLLED FOREIGN CORPORATIONS.—

"(A) IN GENERAL.—Except as otherwise provided in this paragraph, dividends, interest, rents, and royalties received or accrued by the taxpayer from a controlled foreign

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