Page:United States Statutes at Large Volume 100 Part 3.djvu/746

 100 STAT. 2554

PUBLIC LAW 99-514—OCT. 22, 1986

"(A) such person is an individual, corporation, partner&aL\; ship, trust, or estate which controls, or is controlled by, the controlled foreign corporation, or "(B) such person is a corporation, partnership, trust, or estate which is controlled by the same person or persons which control the controlled foreign corporation." e (2) Paragraph (3) of section 954(d) is amended by striking out the last 2 sentences and inserting in lieu thereof the following: "For purposes of the preceding sentence, control means, with respect to a corporation, the ownership, directly or indirectly, of 1 stock possessing 50 percent or more of the total voting power of 5 all classes of stock entitled to vote or of the total value of stock B of such corporation. In the case of a partnership, trust, or estate, control means the ownership, directly or indirectly, of 50 percent or more (by value) of the beneficial interests in such partnership, trust, or estate. For purposes of this paragraph, rules similar to the rules of section 958 shall apply." (f) REPEAL OF CERTAIN LIMITATIONS ON AMOUNT OF SUBPART F

INCOME.—Section 952 (defining subpart F income) is amended by striking out subsections (c) and (d) and inserting in lieu thereof the following: "(c) LIMITATION.— "^ • • " - - ^"^ 'r.''^a Ti -^l' -v.^/,.:/.,..-.,. ^T. "(1) IN GENERAL.— riBm'. "(A) SUBPART F INCOME LIMITED TO CURRENT EARNINGS

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AND PROFITS.—For purposes of subsection (a), the subpart F income of any controlled foreign corporation for any taxable year shall not exceed the earnings and profits of such corporation for such taxable year. "(B) CERTAIN PRIOR YEAR DEFICITS MAY BE TAKEN INTO ACCOUNT.—

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"(i) IN GENERAL.—The amount included in the gross income of any United States shareholder under section 951(a)(l)(A)(i) for any taxable year and attributable to a qualified activity shall be reduced by the amount of such shareholder's pro rata share of any qualified deficit. "(ii) QUALIFIED DEFICIT.—The term 'qualified deficit' means any deficit in earnings and profits of the controlled foreign corporation for any prior taxable year which began after December 31, 1986, and for which the controlled foreign corporation was a controlled foreign corporation; but only to the extent such deficit— "(I) is attributable to the same qualified activity as the activity giving rise to the income being offset, and "(II) has not previously been taken into account under this subparagraph. "(iii) QUALIFIED ACTIVITY.—For purposes of this paragraph, the term 'qualified activity' means any activity giving rise to— "(I) foreign base company shipping income, "(II) foreign base company oil related income, "(III) in the case of a qualified insurance com', tr pany, insurance income or ' ' ~ "(IV) in the case of a qualified financial institution, foreign personal holding company income.

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