Page:United States Statutes at Large Volume 107 Part 1.djvu/521

 PUBLIC LAW 103-66 —AUG. 10, 1993 107 STAT. 495 basis tax if the interest had been paid to the guarantor, or "(11) if the taxpayer owns a controlling interest in the guarantor. For purposes of subclause (II), except as provided in regulations, the term 'a controlling interest' means direct or indirect ownership of at least 80 percent of the total voting power and value of all classes of stock of a corporation, or 80 percent of the profit and capital interests in any other entity. For purposes of the preceding sentence, the rules of paragraphs (1) and (5) of section 267(c) shall apply; except that such rules shall also apply to interest in entities other than corporations. "(iii) GUARANTEE. —Except as provided in regulations, the term 'guarantee' includes any arrangement under which a person (directly or indirectly through an entity or otherwise) assures, on a concUtional or imconditional basis, the payment of another person's obligation under any indebtedness. "(E) GROSS BASIS AND NET BASIS TAXATION. — "(i) GROSS BASIS TAX.— The term 'gross basis tax' means any tax imposed by this subtitle which is determined by reference to the gross amount of any item of income without any reduction for any deduction allowed by this subtitle. "(ii) NET BASIS TAX.—The term 'net basis tax' means any tax imposed by this subtitle which is not a gross basis tax." (c) CONFORMING AMENDMENTS.— (1) Subparagraph (B) of section 163(j)(5) is amended by 26 USC 163. striking "to a related person". (2) The subsection heading for subsection (j) of section 163 is amended to read as follows: "(j) LIMITATION ON DEDUCTION FOR INTEREST ON CERTAIN INDEBTEDNESS.—". (d) EFFECTIVE DATE.—The amendments made by this section 26 USC 163 note. shall apply to interest paid or accrued in taxable years beginning after December 31, 1993. PART III—FOREIGN TAX PROVISIONS Subpart A—Current Taxation of Certain Earnings of Controlled Foreign Corporations SEC. 13231. EARNINGS INVESTED IN EXCESS PASSIVE ASSETS. (a) GENERAL RULE.— Paragraph (1) of section 951(a) (relating to amounts included in gross income of United States shareholders) is amended by striking "and" at the end of subparagraph (A),. by striking the period at the end of subparagraph (B) and inserting "; and", and by adding at the end thereof the following new subparagraph: "(C) the amount determined under section 956A with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(3)). "

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