Page:United States Statutes at Large Volume 102 Part 4.djvu/540

 102 STAT. 3510

PUBLIC LAW 100-647—NOV. 10, 1988 (i) by striking out "as of August 16, 1986, under a reinsurance contract in effect on such date" and inserting in lieu thereof "under a reinsurance contract", (ii) by striking out "the preceding sentence" and inserting in lieu thereof "this subparagraph", and (iii) by adding at the end thereof the following: "For purposes of this paragraph, the amount of qualified reinsurance income shall not exceed the amount of insurance income from reinsurance contracts for calendar year 1985. In the case of controlled foreign corporations described in subparagraph (C)(ii), the preceding sentence shall not apply and the qualified reinsurance income of any such corporation shall not exceed such corporation's proportionate share of $27,000,000 (determined on the basis of respective amounts of qualified reinsurance income determined without regard to this subparagraph)." (14)(A) Paragraph (3) of section 954(d) of the 1986 Code is amended by striking out "50 percent or more" each place it appears and inserting in lieu thereof "more than 50 percent". (B) Clause (ii) of section 861(c)(2)(B) of the 1986 Code is amended to read as follows: "(ii) such section shall be applied by substituting *10 percent or more' for 'more than 50 percent' each place it appears." (15) Subsection (b) of section 951 of the 1986 Code is amended by striking out "section 957(d)" and inserting in lieu thereof "section 957(c)". (16) Subsection (c) of section 952 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(3) SPECIAL RULE FOR DETERMINING EARNINGS AND PROFITS.—

For purposes of this subsection, earnings and profits of any controlled foreign corporation shall be determined without regard to paragraphs (4), (5), and (6) of section 312(n). Under regulations, the preceding sentence shall not apply to the extent it would increase earnings and profits by an amount which was previously distributed by the controlled foreign corporation." (17) Subparagraph (A) of section 881(c)(4) of the 1986 Code is amended by strilang out clauses (ii), (iii), (iv), and (v) and inserting in lieu thereof the following: "(ii) Paragraph (4) of section 954(b) (relating to exception for certain income subject to high foreign taxes). "(iii) Clause (i) of section 954(c)(3)(A) (relating to certain income received from related persons)." (18) Subparagraph (B) of section 954(c)(1) of the 1986 Code is amended by striking out "or" at the end of clause (i), by redesignating clause (ii) as clause (iii), and by inserting after clause (i) the following new clause: "(ii) which is an interest in a trust, partnership, or REMICor". (19)(A) Subsection (a) of section 6046 of the 1986 Code is amended by striking out "and" at the end of paragraph (2), by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (2) the following new paragraph: "(3) each person (not described in paragraph (2)) who, at any time after January 1, 1987, is treated as a United States shareholder under section 953(c) with respect to a foreign corporation, and".

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