Page:United States Statutes at Large Volume 100 Part 3.djvu/763

 PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2571

"(B) the tax which would be imposed by this chapter for such year without regard to the inclusion in gross income under section 1293 of the undistributed earnings of a qualified electing fund. "(2) UNDISTRIBUTED EARNINGS.—The term 'undistributed earnings' means, with respect to any qualified electing fund, the excess (if any) of— "(A) the amount includible in gross income by reason of section 1293(a) for the taxable year, over "(B) the amount not includible in gross income by reason of section 1293(c) for such taxable year. "(c) TERMINATION OF EXTENSION.— "(1) DISTRIBUTIONS.—

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"(A) IN GENERAL.—If a distribution is not includible in gross income for the taxable year by reason of section 1293(c), then the extension under subsection (a) for payment of the undistributed PFIC earnings tax liability with respect to the earnings to which such distribution is attributable shall expire on the last date prescribed by law (determined without regard to extensions) for filing the return of tax for such taxable year. "(B) ORDERING RULE.—For purposes of subparagraph (A), a distribution shall be treated as made from the most recently accumulated earnings and profits. "(2) DISPOSITIONS, ETC.—If—

"(A) stock in a passive foreign inv^tment company is disposed of during the taxable year, or .;..,... "(B) a passive foreign investment company ceases to be a qualified electing fund, all extensions under subsection (a) for payment of undistributed PFIC earnings tax liability attributable to such stock (or, in the case of such a cessation, attributable to any stock in such company) which had not expired before the date of such disposition or cessation shall expire on the last date prescribed by law (determined without regard to extensions) for filing the return of tax for the taxable year in which such disposition or cessation occurs. "(3) JEOPARDY.—If the Secretary believes that collection of an amount to which an extension under this section relates is in jeopardy, the Secretary shall immediately terminate such extension with respect to such amount, and notice and demand shall be made by him for payment of such amount. "(d) ELECTION.—The election under subsection (a) shall be made not later than the time prescribed by law (including extensions) for filing the return of tax imposed by this chapter for the taxable year. "(e) AUTHORITY TO REQUIRE BOND.—Section 6165 shall apply to any extension under this section as though the Secretary were extending the time for payment of the tax. "SEC. 1295. QUALIFIED ELECTING FUND.

"(a) GENERAL RULE.—For purposes of this part, the term 'qualified electing fund' means any passive foreign investment company if— "(1) an election under subsection (b) applies to such company for the taxable year, and "(2) such company complies for such taxable year with such requirements as the Secretary may prescribe for purposes of—

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