Page:United States Statutes at Large Volume 111 Part 1.djvu/988

 Ill STAT. 964 PUBLIC LAW 105-34—AUG. 5, 1997 Notification. (1) IN GENERAL. —Subsection (a) of section 986 (relating to translation of foreign taxes) is amended to read as follows: " (a) FOREIGN INCOME TAXES. — "(1) TRANSLATION OF ACCRUED TAXES. — "(A) IN GENERAL.—For purposes of determining the amount of the foreign tax credit, in the case of a taxpayer who takes foreign income taxes into account when accrued, the amount of any foreign income taxes (and any adjustment thereto) shall be translated into dollars by using the average exchange rate for the taxable year to which such taxes relate. "(B) EXCEPTION FOR CERTAIN TAXES. —Subparagraph (A) shall not apply to any foreign income taxes— "(i) paid after the date 2 years after the close of the taxable year to which such taxes relate, or "(ii) paid before the beginning of the taxable year to which such taxes relate. "(C) EXCEPTION FOR INFLATIONARY CURRENCIES.— Subparagraph (A) shall not apply to any foreign income taxes the liability for which is denominated in any inflationary currency (as determined under regulations). " (D) CROSS REFERENCE.— Tor adjustments where tax is not paid within 2 years, see section 905(c). " (2) TRANSLATION OF TAXES TO WHICH PARAGRAPH (1) DOES NOT APPLY.— For purposes of determining the amount of the foreign tax credit, in the case of any foreign income taxes to which subparagraph (A) of paragraph (1) does not apply— "(A) such taxes shall be translated into dollars using the exchange rates as of the time such taxes were paid to the foreign country or possession of the United States, and "(B) any adjustment to the amount of such taxes shall be translated into dollars using— "(i) except as provided in clause (ii), the exchange rate as of the time when such adjustment is paid to the foreign country or possession, or "(ii) in the case of any refund or credit of foreign income taxes, using the exchange rate as of the time of the original payment of such foreign income taxes. "(3) FOREIGN INCOME TAXES.—For purposes of this subsection, the term 'foreign income taxes' means any income, war profits, or excess profits taxes paid or accrued to any foreign country or to any possession of the United States.". (2) ADJUSTMENT WHEN NOT PAID WITHIN 2 YEARS AFTER YEAR TO WHICH TAXES RELATE.— Subsection (c) of section 905 is amended to read as follows: "(c) ADJUSTMENTS TO ACCRUED TAXES.— " (1) IN GENERAL.—I f— "(A) accrued taxes when paid differ from the amounts claimed as credits by the taxpayer, "(B) accrued taxes are not paid before the date 2 years after the close of the taxable year to which such taxes relate, or "(C) any tax paid is refunded in whole or in part, the taxpayer shall notify the Secretary, who shall redetermine the amount of the tax for the year or years affected. The

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