Page:United States Statutes at Large Volume 111 Part 1.djvu/966

 Ill STAT. 942 PUBLIC LAW 105-34—AUG. 5, 1997 sale or otherwise) to make related pa5niients with respect to positions in substantially similar or related property. "(B) WITHHOLDING TAX.— For purposes of this paragraph, the term 'withholding tax' includes any tax determined on a gross basis; but does not include any tax which is in the nature of a prepayment of a tax imposed on a net basis. "(2) DEEMED PAID TAXES.—In the case of income, war prof- its, or excess profits taxes deemed paid under section 853, 902, or 960 through a chain of ownership of stock in 1 or more corporations, no credit shall be allowed under subsection (a) for such taxes if— "(A) any stock of any corporation in such chain (the ownership of which is required to obtain credit under subsection (a) for such taxes) is held for less than the period described in paragraph (l)(A)(i), or "(B) the corporation holding the stock is under an obligation referred to in paragraph (l)(A)(ii). "(3) 45-DAY RULE IN THE CASE OF CERTAIN PREFERENCE DIVIDENDS. — In the case of stock having preference in dividends and dividends with respect to such stock which are attributable to a period or periods aggregating in excess of 366 days, paragraph (l)(A)(i) shall be applied— "(A) by substituting '45 days' for '15 days' each place it appears, and "(B) by substituting '90-day period' for '30-day period'. "(4) EXCEPTION FOR CERTAIN TAXES PAID BY SECURITIES DEALERS. — " (A) IN GENERAL.— Paragraphs (1) and (2) shall not apply to any qualified tax with respect to any security held in the active conduct in a foreign country of a securities business of any person— "(i) who is registered as a securities broker or dealer under section 15(a) of the Securities Exchange Act of 1934, "(ii) who is registered as a Government securities broker or dealer under section 15C(a) of such Act, or "(iii) who is licensed or authorized in such foreign country to conduct securities activities in such country and is subject to bona fide regulation by a securities regulating authority of such country. "(B) QUALIFIED TAX.— For purposes of subparagraph (A), the term 'qualified tax' means a tax paid to a foreign country (other than the foreign country referred to in subparagraph (A)) if— "(i) the dividend to which such tax is attributable is subject to taxation on a net basis by the country referred to in subparagraph (A), and "(ii) such country allows a credit against its net basis tax for the full amount of the tax paid to such other foreign country. "(C) REGULATIONS. —The Secretary may prescribe such regulations as may be appropriate to carry out this paragraph, including regulations to prevent the abuse of the

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