Page:United States Statutes at Large Volume 107 Part 1.djvu/526

 107 STAT. 500 PUBLIC LAW 103-66 —AUG. 10, 1993 lease with a term of at least 12 months shall be treated as an asset actually held by such corporation. "(2) DETERMINATION OP ADJUSTED BASIS.— "(A) IN GENERAL. —The adjusted basis of any asset to which paragraph (1) applies shall be the unamortized portion (as determined under regulations prescribed by the Secretary) of the present value of the payments under the lease for the use of such property. Regulations. «(B) PRESENT VALUE.— For purposes of Subparagraph (A), the present value of payments described in subparagraph (A) shall be determined in the manner provided in regulations prescribed by the Secretary— "(i) as of the beginning of the lease term, and "(ii) except as provided in such regulations, by using a discount rate equal to the applicable Federal rate determined under section 1274(d>-- "(I) by substituting the lease term for the term of the debt instrument, and "(II) without regard to paragraph (2) or (3) thereof. " (3) EXCEPTIONS. —This subsection shall not apply in any case where— "(A) the lessor is a related person (as defined in section 954(d)(3)) with respect to the foreign corporation, or "(B) a principal purpose of leasing the property was to avoid the provisions of this part or section 956A. "(e) SPECIAL RULES FOR CERTAIN INTANGIBLES. — "(1) RESEARCH EXPENDITURES.— The adjusted basis of the total assets of a controlled foreign corporation shall be increased by the research or experimental expenditures (within the meaning of section 174) paid or inciured by such foreign corporation during the taxable year and the preceding 2 taxable years. Any expenditure otherwise taken into account under the preceding sentence shall be reduced by the £unount of any reimbursement received by the controlled foreign corporation with respect to such expenditure. "(2) CERTAIN UCENSED INTANGIBLES. — "(A) IN GENERAL.— In the case of any intangible property (as defined in section 936(h)(3)(B)) with respect to which a controlled foreign corporation is a licensee and which is used by such foreign corporation in the active conduct of a trade or business, the adjusted basis of the total assets of such foreign corporation shall be increased by an amount equal to 300 percent of the payments made during the taxable year by such foreign corporation for the use of such intangible property. "(B) EXCEPTIONS.—Subparagraph (A) shall not apply to— "(i) any payments to a foreign person if such foreign person is a related person (as defined in section 954(d)(3)) with respect to the controlled foreign corporation, and "(ii) any payments under a license if a principal purpose of entering into such license was to avoid the provisons of this part or section 956A

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