Page:United States Statutes at Large Volume 100 Part 3.djvu/747

 PUBLIC LAW 99-514—OCT. 22, 1986 t n ^ .i^< 1

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100 STAT. 2555

"(iv) PRO RATA SHARE.—For purposes of this paragraph, the shareholder's pro rata share of any deficit for any prior taxable year shall be determined under rules similar to rules under section 951(a)(2) for whichever of the following yields the smaller share: "(I) the close of the taxable year, or "(II) the close of the taxable year in which the deficit arose. "(v) QUALIFIED INSURANCE COMPANY.—For purposes of this subparagraph, the term 'qualified insurance company' means any controlled foreign corporation predominantly engaged in the active conduct of an insurance business in the taxable year and in the prior taxable years in which the deficit arose. "(vi) QUALIFIED FINANCIAL INSTITUTION.—For purposes of this paragraph, the term 'qualified financial institution' means any controlled foreign corporation predominantly engaged in the active conduct of a banking, financing, or similar business in the taxable year and in the prior taxable year in which the deficit arose.

"(2) RECHARACTERIZATION IN SUBSEQUENT TAXABLE YEARS.—If

the subpart F income of any controlled foreign corporation for any taxable year was reduced by reason of paragraph (1)(A), any excess of the earnings and profits of such corporation for any subsequent taxable year over the subpart F income of such foreign corporation for such taxable year shall be recharacterized as subpart F income under rules similar to the rules applicable under section 904(f)(5)." (g) EFFECTIVE DATES.—

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(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 1986.

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(2) SPECIAL RULE FOR REPEAL OF EXCLUSION FOR REINVESTMENT SHIPPING INCOME.—

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(A) IN GENERAL.—In the case of any qualified controlled foreign corporation— (i) the amendments made by subsection (c) shall apply to taxable years ending on or after January 1, 1992, and (ii) sections 955(a)(1)(A) and 955(a)(2)(A) of the Internal Revenue Code of 1986 (as amended by subsection (c)(3)) shall be applied by substituting "ending before 1992" for "beginning before 1987".

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(B) QUALIFIED CONTROLLED FOREIGN CORPORATION.—For

purposes of subparagraph (A), the term "qualified controlled foreign corporation" means any controlled foreign corporation (as defined in section 957 of such Code)— (i) if the United States agent of such corporation is a domestic corporation incorporated on March 13, 1951, and -^n (ipif_ (I) the certificate of incorporation of such corporation is dated July 23, 1963, and !'':. • • (II) such corporation has a wholly owned subsidiary and its certificate of incorporation is dated November 2, 1965.

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