Page:United States Statutes at Large Volume 100 Part 3.djvu/753

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2561

(2) the transfer, sale, exchange, or other disposition is to any member of a qualified ownership group, (3) the recipient of the share of stock elects, for purposes of such section 897, a carryover basis in the transferred shares, and (4) an election under this section applies to such transfer, sale, exchange, or other disposition. (b) MEMBER OF A QUALIFIED OWNERSHIP GROUP.—For purposes of this section, the term "member of a qualified ownership group" means a corporation incorporated on June 16, 1890, under the laws of the Netherlands or a corporation incorporated on October 18, 1897, under the laws of the United Kingdom or any corporation owned directly or indirectly by either or both such corporations. (c) ELECTION.—An election under this section shall be made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe, and an election under this section may only be made with respect to 1 transfer, sale, exchange, or other disposition. (d) EFFECTIVE DATE.—The provisions of this section shall take effect on the date of the enactment of this section.

Subtitle D—Special Tax Provisions for United States Persons SEC. 1231. MODIFICATIONS TO SECTION 936. (a) TREATMENT OF INTANGIBLES.— (1) COST SHARING METHOD.—Section

936(h)(5)(C)(i)(I)

is

amended— (A) by striking out "the same proportion of the cost" and inserting in lieu thereof "the same proportion of 110 percent of the cost", and (B) by adding at the end thereof the following new sentence: "In the case of intangible property described in subsection (h)(3)(B)(i) which the electing corporation is treated as owning under subclause (II), in no event shall the i, payment required under this subclause be less than the inclusion or payment which would be required under section 367(d)(2)(A)(ii) or section 482 if the electing corporation were a foreign corporation." (2)

PROFIT

SPUT

METHOD.—Section

936(h)(5)(C)(ii)(II)

is

amended by striking out "the third sentence thereof)" and inserting in lieu thereof "the third and fourth sentences thereof, but substituting '120 percent' for '110 percent' in the second sentence thereof)". Qo) MODIFICATION OF REQUIREMENT THAT AMOUNTS B E RECEIVED IN

THE UNITED STATES.—Subsection (h) of section 936 is amended by adding at the end thereof the following new sentence: "This subsection shall not apply to any amount described in subsection (a)(l)(A)(i) received from a person who is not a related person (within the meaning of subsection (h)(3) but without regard to subparagraphs (D)(ii)(I) and (E)(i) thereof) with respect to the domestic corporation." (c) TREATMENT OF CERTAIN INVESTMENT INCOME AS QUALIFIED POSSESSION SOURCE INVESTMENT INCOME.—Subsection (d) of section

936 is amended by adding at the end thereof the following new paragraph:

�