Page:United States Statutes at Large Volume 107 Part 1.djvu/523

 PUBLIC LAW 103-66 —AUG. 10, 1993 107 STAT. 497 "(d) TREATMENT OP CERTAIN GROUPS OF CONTROLLED FOREIGN CORPORATIONS. — " (1) IN GENERAL. —For purposes of applying subsection (c)— "(A) all controlled foreign corporations which are members of the same CFC group shall be treated as 1 controlled foreign corporation, and "(B) the amount of the excess passive assets determined with respect to such 1 corporation shall be allocated among the controlled foreign corporations which are members of such group in proportion to their respective amounts of applicable earnings. "(2) CFC GROUP.— For purposes of paragraph (1), the term corporation which is a controlled foreign corporation, but only if— "(A) the top tier corporation owns directly more than 50 percent (by vote or value) of the stock of at least 1 of the other controlled foreign corporations, and "(B) more than 50 percent (by vote or value) of the stock of each of the controlled foreign corporations (other than the top tier corporation) is owned (directly or indirectly) by one or more other members of the group. "(e) SPECIAL RULE WHERE CORPORATION CEASES TO BE CON- TROLLED FOREIGN CORPORATION DURING TAXABLE YEAR. —If any foreign corporation ceases to be a controlled foreign corporation during any taxable year— "(1) the determination of any United States shareholder's pro rata share shall be made on the basis of stock owned (within the meaning of section 958(a)) by such shareholder on the last day during the taxable year on which the foreign corporation is a controfled foreign corporation, "(2) the amount of such corporation's excess passive assets for such taxable year shall be determined by only taking into account quarters ending on or before such last day, and "(3) in determining applicable earnings, the amount taken into account by reason of being described in paragraph (2) of section 316(a) shall be the portion of the amount so described which is allocable (on a pro rata basis) to the part of such year during which the corporation is a controlled foreign corporation. (f) REGULATIONS.— The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations to prevent the avoidance of the provisions of this section through reorganizations or otherwise." (c) PREVIOUSLY TAXED INCOME RULES.— (1) IN GENERAL. —Subsection (a) of section 959 (relating to exclusion from gross income of previously taxed earnings and profits) is amended by striking "or" at the end of paragraph (1), by adding "or" at the end of paragraph (2), and by inserting after paragraph (2) the following new paragraph: "(3) such amounts would, but for this subsection, be included under section 951(a)(l)(C) in the gross income of,". (2) ALLOCATION RULES. — (A) Subsection (a) of section 959 is amended by adding 26 USC 959. at the end thereof the following new sentence: "The rules of subsection (c) shall apply for purposes of paragraph
 * CFC group' means 1 or more chains of controlled foreign corporations connected through stock ownership with a top tier

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