Page:United States Statutes at Large Volume 102 Part 4.djvu/557

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3527

"(e) FOREIGN PARTNER.—For purposes of this section, the term 'foreign partner' means any partner who is not a United States person. "(f) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations providing for the application of this section in the case of publicly traded partnerships." (B) Paragraph (2) of section 6401(b) of the 1986 C!ode is amended by striking out the last sentence and inserting in lieu thereof the following: "The preceding sentence shall not apply to any credit so allowed by reason of section 1446." (C) The table of sections for subchapter A of chapter 3 of the 1986 Code is amended by striking out the item relating to section 1446 and inserting in lieu thereof the following: "Sec. 1446. Withholding of tax on foreign partners' share of effectively connected income."

(D) The amendments made by this paragraph shall apply to 26 USC 1446 taxable years beginning after December 31, 1987. No amount note. shall be required to be deducted and withheld under section 1446 of the 1986 Code (as in effect before the amendment made by subparagraph (A)). (2)(A) Subsection (a) of section 872 of the 1986 Code is amended by striking out "the case of a nonresident alien individual" and inserting in lieu thereof "the case of a nonresident alien individual, except where the context clearly indicates otherwise". (B) Subsection (b) of section 882 of the 1986 Code is amended by striking out "the case of a foreign corporation" and inserting in lieu thereof "the case of a foreign corporation, except where the context clearly indicates otherwise". (t) AMENDMENTS RELATED TO SECTION 1247 OF THE REFORM ACT.—

(1) Subparagraph (A) of section 892(a)(2) of the 1986 Code is amended by striking out "or" at the end of clause (i), by striking out the period at the end of clause (ii) and inserting in lieu thereof ", or", and by adding at the end thereof the following new clause: "(iii) derived from the disposition of any interest in a controlled commercial entity." (2) Clause (ii) of section 892(a)(2)(A) of the 1986 Code is amended to read as follows: "(ii) received by a controlled commercial entity or received (directly or indirectly) from a controlled commercial entity." (3) Subsection (a) of section 892 of the 1986 Code is amended by adding at the end thereof the following new paragraph: "(3) TREATMENT AS RESIDENT.—For purposes of this title, a foreign government shall be treated as a corporate resident of its country. A foreign government shall be so treated for purposes of any income tax treaty obligation of the United States if such government grants equivalent treatment to the Government of the United States." (4) Section 893 of the 1986 Code is amended by adding at the end thereof the following new subsection: "(c) LIMITATION ON EXCLUSION.—Subsection (a) shall not apply to—

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