Page:United States Statutes at Large Volume 102 Part 4.djvu/554

 102 STAT. 3524

PUBLIC LAW 100-647—NOV. 10, 1988

"(ii) such foreign corporation is a qualified resident of such foreign country." (3) Paragraph (1) of section 884(0 of the 1986 Code is amended— (A) by striking out "sections 871, 881, 1441, and 1442" and inserting in lieu thereof "this subtitle", and (B) by adding at the end thereof the following new sentence: "To the extent provided in regulations, subparagraph (A) shall not apply to interest in excess of the amounts reasonably ex• pected to be deductible under section 882 in computing the effectively connected teixable income of such foreign corporation." (4) Paragraph (4) of section 884(e) of the 1986 Code is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new ' subparagraph: "(C) CORPORATIONS OWNED BY PUBLICLY TRADED DOMESTIC

CORPORATIONS.—A foreign corporation which is a resident of a foreign country shall be treated as a qualified resident of such foreign country if— "(i) such corporation is wholly owned (directly or indirectly) by a domestic corporation, and "(ii) the stock of such domestic corporation is primarily and regularly traded on an established securities market in the United States." (5) Subparagraph (A) of section 884(e)(4) of the 1986 Code is amended— (A) by striking out "more than 50 percent" in clause (i) and inserting in lieu thereof "50 percent or more", and (B) by striking out "or the United States" in clause (ii) and inserting in lieu thereof "or citizens or residents of the United States". (6) Subsection (e) of section 884 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(5) EXCEPTION FOR INTERNATIONAL ORGANIZATIONS.—This section shall not apply to an international organization (as defined in section 7701(a)(18))." (7) Subparagraph (B) of section 861(a)(2) of the 1986 Code is amended by striking out "other than under section 884(d)(2)" each place it appears and inserting in lieu thereof "other than income described in section 884(d)(2)". (8) Paragraph (2) of section 26(b) of the 1986 Code is amended by striking out "and" at the end of subparagraph (J), by striking out the period at the end of subparagraph (K) and inserting in lieu thereof ", and", and by adding at the end thereof the following new subparagraph: "(L) section 884 (relating to branch profits tax)." (9) Section 861 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(0 CROSS REFERENCE.— "For treatment of interest paid by the branch of a foreign corporation, see section 884(f)."

(10) The paragraph (6) of section 906(b) of the 1986 Code which was added by section 1241(c) of the Reform Act is redesignated as paragraph (7).

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