Page:United States Statutes at Large Volume 102 Part 4.djvu/537

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3507

Secretary of the Treasury or his delegate may prescribe) to have this paragraph not apply. In the case of members of the same af^liated group (as so defined), such an election may be made only if each member consents to such election." (i) AMENDMENTS RELATED TO SECTION 1221 OF THE REFORM ACT.—

dXA) Subparagraph (C) of section 953(c)(3) of the 1986 Code is amended by adding at the end thereof the following new sentence: "An election under this subparagraph made for any taxable year shall not be effective if the corporation (or any predecessor thereof) was a disqualified corporation for the taxable year for which the election was made or for any prior taxable year beginning after 1986." (B) Clause (i) of section 953(c)(3)(D) of the 1986 Code is amended to read as follows: "(i) PERIOD DURING WHICH ELECTION IN EFFECT.—

"(I) IN GENERAL.—Except as provided in subclause (II), any election under subparagraph (C) shall apply to the taxable year for which made and all subsequent taxable years unless revoked with the consent of the Secretary. "(II) TERMINATION.—If a foreign corporation which made an election under subparagraph (C) for any taxable year is a disqualified corporation for any subsequent taxable year, such election shall not apply to any taxable year beginning after such subsequent taxable year. (C) Paragraph (3) of section 953(c) of the 1986 Clode is amended by adding at the end thereof the following new subparagraph: "(E) DISQUALIFIED CORPORATION.—For purposes of this paragraph the term 'disqualified corporation' means, with respect to any taxable year, any foreign corporation which is a controlled foreign corporation for an uninterrupted period of 30 days or more during such taxable year (determined without regard to this subsection) but only if a United States shareholder (determined without regard to this subsection) owns (within the meaning of section 958(a)) stock in such corporation at some time during such taxable year." (2)(A) Paragraph (1) of section 953(c) of the 1986 Code is amended by striking out "and" at the end of subparagraph (A), by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ", and", and by adding at the end thereof the following new subparagraph: "(C) the pro rata share referred to in section 951(a)(l)(A)(i) shall be determined under paragraph (5) of this subsection." (B) Subsection (c) of section 953 of the 1986 Code is amended by redesignating paragraph (5) as paragraph (6) and by inserting after paragraph (4) the following new paragraph: "(5) DETERMINATION OF PRO RATA SHARE.—

"(A) IN GENERAL.—The pro rata share determined under this paragraph for any United States shareholder is the lesser of— "(i) the amount which would be determined under paragraph (2) of section 951(a) if—

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