Page:United States Statutes at Large Volume 111 Part 1.djvu/1017

 PUBLIC LAW 105-34—AUG. 5, 1997 111 STAT. 993 not related persons (as defined in subsection (d)(3)) and which are located within the country under the laws of which the controlled foreign corporation is created or organized. "(7) ANTI-ABUSE RULES.— For purposes of applying this subsection, there shall be disregarded any item of income, gain, loss, or deduction with respect to any transaction or series of transactions one of the principal purposes of which is qualify- ing income or gain for the exclusion under this section, including any change in the method of computing reserves or any other transaction or series of transactions a principal purpose of which is the acceleration or deferral of any item in order to claim the benefits of such exclusion through the application of this subsection. "(8) COORDINATION WITH SECTION 953. —T his subsection shall not apply to investment income allocable to contracts that insure related party risks or risks located in a foreign country other than the country in which the qualifying insurance comapny is created or organized. "(9) APPLICATION.— Th is subsection shall apply to the first full taxable year of a foreign corporation beginning after December 31, 1997, and before January 1, 1999, and to taxable years of United States shareholders with or within which such taxable year of such foreign corporation ends.". (b) EXEMPTION FROM FOREIGN BASE COMPANY SERVICES INCOME. — Paragraph (2) of section 954(e) is amended by striking "or" at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ", or", and by adding at the end the following: "(C) in the case of taxable years described in subsection (h)(8), the active conduct by a controlled foreign corporation of a banking, financing, insurance, or similar business, but only if the corporation is predominantly engaged in the active conduct of such business (within the meaning of subsection (h)(3)) or is a qualifying insurance company.". (c) EFFECTIVE DATE. —The amendments made by this section 26 USC 954 note. shall apply to the first full taxable year of a foreign corporation beginning after December 31, 1997, and before January 1, 1999, and to taxable years of United States shareholders with or within which such taxable year of such foreign corporation ends. TITLE XII~SIMPLIFICATION PROVI- SIONS RELATING TO INDIVIDUALS AND BUSINESSES Subtitle A—Provisions Relating to Individuals SEC. 1201. BASIC STANDARD DEDUCTION AND MINIMUM TAX EXEMP- TION AMOUNT FOR CERTAIN DEPENDENTS. (a) BASIC STANDARD DEDUCTION. — (1) IN GENERAL. — Paragraph (5) of section 63(c) (relating to limitation on basic standard deduction in the case of certain dependents) is amended by striking "shall not exceed" and

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