Page:United States Statutes at Large Volume 107 Part 1.djvu/516

 107 STAT. 490 PUBLIC LAW 103-66—AUG. 10, 1993 "(ii) APPLICABLE PERCENTAGE. —The term 'applicable percentage' means the percentage determined in accordance with the following table: "In the case of taxable The yean begiiming in: percentage is: 1994 60 1995 55 1996 50 1997 45 1998 and thereafter 40. " (I) IN GENERAL.— An election under this subparagraph by any possession corporation may be made only for the corporation's first taxable year beginning after December 31, 1993, for which it is a possession corporation. "(II) PERIOD OF ELECTION.— An election under this subparagraph shall apply to the taxable year for which made and all subsequent taxable years unless revoked. "(Ill) AFFILIATED GROUPS.—If, for any taxable year, an election is not in effect for any possession corporation which is a member of an affiliated group, any election under this subparagraph for any other member of such group is revoked for such taxable year and all subsequent taxable years. For purposes of this subclause, members of an affiliated group shall be determined without regard to the exceptions contained in section 1504(b) and as if the constructive ownership rules of section 1563(e) applied for purposes of section 1504(a). The Secretary may prescribe regulations to prevent the avoidance of this subclause through deconsolidation or otherwise. "(C) CROSS REFERENCE, — Tor definitions and special rules applicable to this paragraph, see subsection (i)." 26 USC 936. (b) DEFINITIONS AND SPECIAL RULES.— Section 936 is amended by adding at the end thereof the following new subsection: "(i) DEFINITIONS AND SPECIAL RULES RELATING TO LIMITATIONS OF SUBSECTION (a)(4).— "(1) QUALIFIED POSSESSION WAGES. —For purposes of this section— "(A) IN GENERAL. — The term 'qualified possession wages' means wages paid or incurred by the possession corporation during the taxable year in connection with the active conduct of a trade or business within a possession of the United States to any employee for services performed in such possession, but only if such services are performed while the principal place of employment of such employee is within such possession. "(B) LIMITATION ON AMOUNT OF WAGES TAKEN INTO ACCOUNT.— "(i) IN GENERAL. — The amount of wages which may be taken into account under subparagraph (A) with respect to any employee for any taxable year shall not exceed 85 percent of the contribution and benefit
 * (iii) ELECTION. —

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