Page:United States Statutes at Large Volume 100 Part 3.djvu/722

 100 STAT. 2530

PUBLIC LAW 99-514—OCT. 22, 1986

•ifLt T taxes deemed to be paid by the foreign corporation under this section. a^ii "(5) ACCOUNTING PERIODS.—In the case of a foreign corporation the income, war profits, and excess profits taxes of which are determined on the basis of an accounting period of less than 2j4,, 1 year, the word 'year' as used in this subsection shall be construed to mean such accounting period. "(6)

TREATMENT OF DISTRIBUTIONS FROM EARNINGS BEFORE

1987.— .,;^ "(A) IN GENERAL.—In the case of any dividend paid by a foreign corporation out of accumulated profits (as defined in ,:, ys - this section as in effect on the day before the date of the enactment of the Tax Reform Act of 1986) for taxable years beginning before the 1st taxable year taken into account in p; _ determining the post-1986 undistributed earnings of such corporation— ^ •,,, "(i) this section (as amended by the Tax Reform Act of 1986) shall not apply, but . /; "(ii) this section (as in effect on the day before the ' • date of the enactment of such Act) shall apply. '

"(B) DIVIDENDS PAID FIRST OUT OF POST-1986 EARNINGS.—

,

. Any dividend in a taxable year beginning after December 31, 1986, shall be treated as made out of post-1986 undistributed earnings to the extent thereof. "(7) REGULATIONS.—The Secretary shall provide such regulations as may be necessary or appropriate to carry out the provisions of this section and secton 960, including provisions which provide for the separate application of this section to reflect the separate application of section 904 to separate types of income and loss.

"(d) CROSS REFERENCES.— "(1) For inclusion in gross income of an amount equal to taxes deemed ,,,. paid under subsection (a), see section 78. ^ ^ "(2) For application of subsections (a) and (b) with respect to taxes deemed paid in a prior taxable year by a United States shareholder with respect to a controlled foreign corporation, see section 960. "(3) For reduction of credit with respect to dividends paid out of post1986 undistributed earnings for years for which certain information is not furnished, see section 6038." (b) SECTION 960 CREDIT DETERMINED ON ACCUMULATED BASIS.—The

first sentence of section 960(a)(1) (relating to taxes paid by a foreign corporation) is amended by striking out "then" and all that follows down through the period at the end thereof and inserting in lieu thereof the following: "then, except to the extent provided in regulations, such domestic corporation shall be deemed to have paid a portion of such ,. foreign corporation's post-1986 foreign income taxes determined under section 902 in the same manner as if the amount so included were a dividend paid by such foreign corporation (determined by applying section 902(c) in accordance with section 904(d)(3)(B))." (c) TECHNICAL AMENDMENTS.—

(1) Subparagraph (B) of section 6038(a)(1) (relating to information with respect to certain foreign corporations) is amended to read as follows: "(B) the post-1986 undistributed earnings (as defined in section 902(c)) of such foreign corporation,".

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