Page:United States Statutes at Large Volume 102 Part 4.djvu/743

 PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3713

(b) EFFECTIVE DATE.—The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 6111. CLARIFICATION OF MEANING OF MANUFACTURE UNDER TRUCK EXCISE TAX. (a) IN GENERAL.—Paragraph (1) of section 4052(a) of the 1986 Code (defining first retail sale) is amended by striking out "manufacture, production" and inserting in lieu thereof "production, manufacture". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on January 1, 1988.

26 USC 4462 note.

26 USC 4052 note.

Subtitle F—Foreign Provisions SEC. 6126. DUAL RESIDENT COMPANIES.

(a) GENERAL RULE.—In the case of a transaction which— (1) involves the transfer after the date of the enactment of this Act by a domestic corporation, with respect to which there is a qualified excess loss account, of its assets and liabilities to a foreign corporation in exchange for all of the stock of such foreign corporation, followed by the complete liquidation of the domestic corporation into the common parent, and (2) qualifies, pursuant to Revenue Ruling 87-27, as a reorganization which is described in section 368(a)(l)(F) of the 1986 Code, then, solely for purposes of applying Treasury Regulation section 1.1502-19 to such qualified excess loss account, such foreign corporation shall be treated as a domestic corporation in determining whether such foreign corporation is a member of the affiliated group of the common parent. (b) TREATMENT OF INCOME OF N E W FOREIGN CORPORATION.—

(1) IN GENERAL.—In any case to which subsection (a) applies, for purposes of the 1986 Code— (A) the source and character of any item of income of the foreign corporation referred to in subsection (a) shall be determined as if such foreign corporation were a domestic corporation, (B) the net amount of any such income shall be treated as subpart F income (without regard to section 952(c) of the 1986 Code), and (C) the amount in the qualified excess loss account referred to in subsection (a) shall— (i) be reduced by the net amount of any such income, and (ii) be increased by the amount of any such income distributed directly or indirectly to the common parent described in subsection (a). (2) LIMITATION.—Paragraph (1) shall apply to any item of income only to the extent that the net amount of such income does not exceed the amount in the qualified excess loss account after being reduced under paragraph (I)(C) for prior income. (3) BASIS ADJUSTMENTS NOT APPLICABLE.—To the extent paragraph (1) applies to any item of income, there shall be no increase in basis under section 961(a) of such Code on account of such income (and there shall be no reduction in basis under

26 USC 1502

�