Page:United States Statutes at Large Volume 111 Part 1.djvu/1001

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 977 "(B) any ordinary gain or loss from an actual disposition of stock in a passive foreign investment company during the portion of the calendar year after October 31 shall be taken into account in determining such regulated investment company's ordinary income for the following calendar year. In the case of a company making an election under paragraph (4), the preceding sentence sh^l be applied by substituting the last day of the companys taxable year for October 31.". (2) Subsection (b) of section 852 is amended by adding at the end thereof the following new paragraph: " (10) SPECIAL RULE FOR CERTAIN LOSSES ON STOCK IN PAS- SIVE FOREIGN INVESTMENT COMPANY. —To the extent provided in regulations, the taxable income of a regulated investment company (other than a company to which an election under section 4982(e)(4) applies) shall be computed without regard to any net reduction in the value of any stock of a passive foreign investment company with respect to which an election under section 1296(k) is in effect occurring after October 31 of the taxable year, and any such reduction shall be treated as occurring on the first day of the following taxable year.". (3) Subsection (c) of section 852 is amended by inserting after "October 31 of such year" the following: ", without regard to any net reduction in the value of any stock of a passive foreign investment company with respect to which an election under section 1296(k) is in effect occurring after October 31 of such year,". (d) CONFORMING AMENDMENTS.— (1) Sections 532(b)(4) and 542(c)(10) are each amended by striking "section 1296" and inserting "section 1297". (2) Subsection (f) of section 551 is amended by striking " se ction 1297(b)(5)" and inserting "section 1298(b)(5)". (3) Subsections (a)(1) and (d) of section 1293 are each amended by striking "section 1297(a)" and inserting "section 1298(a)". (4) Paragraph (3) of section 1297(b), as redesignated by subsection (a), is hereby repealed. (5) The table of sections for subpart D of part VI of subchapter P of chapter 1, as redesignated by subsection (a), is amended to read as follows: "Sec. 1297. Passive foreign investment company. "Sec. 1298. Special rules?. (6) The table of subparts for part VI of subchapter P of chapter 1 is amended by striking the last item and inserting the following new items: "Subpart C. Election of mark to market for marketable stock. "Subpart D. General provisions.". (e) CLARIFICATION OF GAIN RECOGNITION ELECTION. — The last sentence of section 1298(b)(1), as so redesignated, is amended by inserting "(determined without regard to the preceding sentence)" after "investment company". SEC. 1123. VALUATION OF ASSETS FOR PASSIVE FOREIGN INVESTMENT COMPANY DETERMINATION. (a) IN GENERAL. —Section 1297, as redesignated by section 1122, is amended by adding at the end the following new subsection: " (e) METHODS FOR MEASURING ASSETS. —

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