Page:United States Statutes at Large Volume 103 Part 3.djvu/288

 103 STAT. 2356 PUBLIC LAW 101-239—DEC. 19, 1989 holder' means any person who is treated as a United States shareholder under section 551. "(c) DETERMINATION OF REQUIRED YEAR.— "(1) CONTROLLED FOREIGN CORPORATIONS.— "(A) IN GENERAL.—In the case of a specified foreign cor- poration described in subsection (b)(l)(A)(i), the required year is— "(i) the majority U.S. shareholder year, or "(ii) if there is no majority U.S. shareholder year, the taxable year prescribea under regulations. " (B) 1-MONTH DEFERRAL ALLOWED.—A Specified foreign i. corporation may elect, in lieu of the taxable year under subparagraph (A)(i), a taxable year beginning 1 month ear- lier than the majority U.S. shareholder year. "(C) MAJORITY U.S. SHAREHOLDER YEAR. — "(i) IN GENERAL.—For purposes of this subsection, the term 'majority U.S. shareholder year' means the tax- able year (if any) which, on each testing day, con- stituted the taxable year of— " (I) each United States shareholder described in subsection (b)(2)(A), and "(II) each United States shareholder not de- scribed in subclause (I) whose stock was treated as owned under subsection (b)(2)(B) by any share- holder described in such subclause, "(ii) TESTING DAY. —The testing days shall be— "(I) the first day of the corporation's taxable year (determined without regard to this section), or "(II) the days during such representative period as the Secret«ury may prescribe. "(2) FOREIGN PERSONAL HOLDING COMPANIES. —In the case of a foreign personal holding company described in subsection (b)(3)(B), the required year shall be determined under par£^aph - . (1), except that subparagraph (B) of paragraph (1) shall not apply." (b) TREATMENT OF DIVIDENDS PAID AFTER CLOSE OF TAXABLE YEAR.— (1) IN GENERAL.—Section 563 is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: "(c) FOREIGN PERSONAL HOLDING COMPANY TAX.— "(1) IN GENERAL.—In the determination of the dividends paid deduction for purposes of part III, a dividend paid after the close of any taxable year and on or before the 15th day of the 3rd month following the close of such taxable year shall, to the extent the company designates such dividend as being taken into account under this subsection, be considered as paid during such taxable year. The amount allowed as a deduction by reason of the application of this subsection with respect to any taxable year shall not exceed the undistributed foreign person^ holding company income of the corporation for the taxable year com- puted without regard to this subsection. "(2) SPECIAL RULES. —In the case of any distribution referred to in paragraph (1)— " (A) paragraph (1) shall apply only if such distribution is to the person who was the shareholder of record (as of the last day of the taxable year of the foreign personal holding

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