Page:United States Statutes at Large Volume 102 Part 4.djvu/533

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3503

TART I—SOURCE RULES AND OTHER GENERAL RULES RELATING TO FOREIGN INCOME". (D) The table of parts for subchapter N of chapter 1 of the 1986 Code is amended by striking out the item relating to part I and inserting in lieu thereof the following: "Part I. Source rules and other general rules relating to foreign income."

(3) Paragraph (3) of section 864(e) of the 1986 Code is amended by striking out the last sentence and inserting in lieu thereof the following: "A similar rule shall apply in the case of the portion of any dividend (other than a qualifying dividend as defined in section 243(b)) equal to the deduction allowable under section 243 or 245(a) with respect to such dividend and in the case of a like portion of any stock the dividends on which would be so deductible and would not be qualifying dividends (as so defined)." (4)(A) Paragraph (5) of section 864(e) of the 1986 Code is amended by adding at the end thereof the following new subparagraph: "(D) TREATMENT OF BANK HOLDING COMPANIES.—TO the

extent provided in regulations— "(i) a bank holding company (within the meaning of section 2(a) of the Bank Holding Company Act of 1956), and "(ii) any subsidiary of a financial institution described in section 581 or 591 or of any bank holding company if such subsidiary is predominantly engaged (directly or indirectly) in the active conduct of a banking, financing, or similar business, shall be treated as a corporation described in subparagraph (C)." (B) Subparagraph (B) of section 864(e)(5) of the 1986 Code is amended by adding at the end thereof the following new sentence: "This subparagraph shall not apply for purposes of paragraph (6)." (5) Paragraph (6) of section 864(e) of the 1986 (Dode is amended by striking out "directly allocable and apportioned" and inserting in lieu thereof "directly allocable or apportioned". (6)(A) Paragraph (7) of section 864(e) of the 1986 Code is amended by striking out "and" at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof a comma, and by adding at the end thereof the following new subparagraphs: "(D) for direct allocation of interest expense in the case of indebtedness resulting in a disallowance under section 246A, "(E) for appropriate adjustments in the application of paragraph (3) in the case of an insurance company, and "(F) that this subsection shall not apply for purposes of any provision of this subchapter to the extent the Secretary determines that the application of this subsection for such purposes would not be appropriate." (B) Subsection (e) of section 864 of the 1986 Code is amended by striking out "(except as provided in regulations)" in the material preceding paragraph (1).

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