Page:United States Statutes at Large Volume 102 Part 4.djvu/526

 102 STAT. 3496

PUBLIC LAW 100-647—NOV. 10, 1988 interest where necessary to prevent avoidance of the purposes of this subparagraph, and "(11) a tax shall not be treated as a withholding tax or other tax imposed on a gross basis if such tax is in the nature of a prepayment of a tax imposed on a net basis." (9) Clause (ii) of section 904(d)(2)(I) of the 1986 Code is amended by striking out "except to the extent that" and all that follows down through "and" at the end thereof and inserting in lieu thereof the following: "except that— "(I) such taxes shall be treated as paid or accrued with respect to shipping income to the extent the taxpayer establishes to the satisfaction of the Secretary that such taxes were paid or accrued with respect to such income, accrued with respect to financial services income to the extent the taxpayer establishes to the satisfaction of the Secretary that such taxes were paid or accrued with respect to such income, and "(III) such taxes shall be treated as paid or accrued with respect to high withholding tax interest to the extent the taxpayer establishes to the satisfaction of the Secretary that such taxes were paid or accrued with respect to such income, and". (10) Clause (i) of section 904(d)(2)(E) of the 1986 Code is amended by striking out "during which it was a controlled foreign corporation" and inserting in lieu thereof "during which it was a controlled foreign corporation and except as provided in regulations, the taxpayer was a United States shareholder in such corporation". (11) Subparagraph (E) of section 904(d)(l) of the 1986 Code is amended by striking out "dividends" and inserting in lieu thereof "in the case of a corporation, dividends". (b) AMENDMENT RELATED TO SECTION 1202 OF THE REFORM ACT.—
 * (II) in the case of a person described in subparagraph (C)(i), such taxes shall be treated as paid or

26 USC 902 note.

(1) Paragraph (7) of section 902(c) of the 1986 Code is amended— (A) by striking out "secton 960" and inserting in lieu thereof "section 960", and (B) by striking out "this section" the second place it appears and inserting in lieu thereof "this section and section 960". (2) Paragraph (1) of section 902(c) of the 1986 (Dode is amended by striking out "sections 964 and 986" and inserting in lieu thereof "sections 964(a) and 986". (3) For purposes of sections 902 and 960 of the 1986 Code, the increase in earnings and profits of any foreign corporation under section 1023(e)(3)(C) of the Reform Act shall be taken into account ratably over the 10-year period beginning with the corporation's first taxable year beginning after December 31, 1986. (4) Paragraph (3) of section 404A(d) of the 1986 Code is amended by striking out "the amount determined" and inserting in lieu thereof "except as provided in regulations, the amount determined".

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