Page:United States Statutes at Large Volume 110 Part 3.djvu/365

 PUBLIC LAW 104-191—AUG. 21, 1996 110 STAT. 2095 States, a State or political subdivision thereof, or the District of Columbia. " (C) INCOME OR GAIN DERIVED FROM CONTROLLED FOREIGN CORPORATION. —Any income or gain derived from stock in a foreign corporation but only— "(i) if the individual losing United States citizenship owned (within the meaning of section 958(a)), or is considered as owning (by applying the ownership rules of section 958(b)), at any time during the 2- year period ending on the date of the loss of United States citizenship, more than 50 percent of— "(I) the total combined voting power of all classes of stock entitled to vote of such corporation, or "(II) the total value of the stock of such corporation, and "(ii) to the extent such income or gain does not exceed the earnings and profits attributable to such stock which were earned or accumulated before the loss of citizenship and during periods that the ownership requirements of clause (i) are met. " (2) GAIN RECOGNITION ON CERTAIN EXCHANGES. — "(A) IN GENERAL.—In the case of any exchange of property to which this paragraph applies, notwithstanding any other provision of this title, such property shall be treated as sold for its iiair market value on the date of such exchange, and any gain shall be recognized for the taxable year which includes such date. " (B) EXCHANGES TO WHICH PARAGRAPH APPLIES.— T h is paragraph shall apply to any exchange during the 10- year period described in subsection (a) if— "(i) gain would not (but for this paragraph) be recognized on such exchange in whole or in part for purposes of this subtitle, "(ii) income derived from such property was from sources within the United States (or, if no income was so derived, would have been from such sources), and "(iii) income derived from the property acquired in the exchange would be from sources outside the United States. " (C) EXCEPTION. — Subparagraph (A) shall not apply if the individual enters into an agreement with the Secretary which specifies that any income or gain derived from the property acquired in the exchange (or any other property which has a basis determined in whole or part by reference to such property) during such 10-year period shall be treated as from sources within the United States. If the property transferred in the exchange is disposed of by the person acquiring such property, such agreement shall terminate and any gain which was not recognized by reason of such agreement shall be recognized as of the date of such disposition. "(D) SECRETARY MAY EXTEND PERIOD.—To the extent provided in regulations prescribed by the Secretary, subparagraph (B) shall be applied by substituting the 15-

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