Page:United States Statutes at Large Volume 112 Part 4.djvu/919

 PUBLIC LAW 105-277—OCT. 21, 1998 112 STAT. 2681-890 (B) Subparagraph (C) of section 6652(c)(1) is amended by striking "subsection (d) or (e)(1) of section 6104 (relating to public inspection of annual returns)" and inserting "section 6104(d) with respect to any annual return". (C) Subparagraph (D) of section 6652(c)(1) is amended by striking "section 6104(e)(2) (relating to public inspection of applications for exemption)" and inserting "section 6104(d) with respect to any exempt status application materials (as defined in such section)". (D) Section 6685 is amended by striking "or (e)". (E) Section 7207 is amended by striking "or (e)". (3) EFFECTIVE DATE. — 26 USC 6i04 (A) IN GENERAL.— Except as provided in subparagraph note. (B), the amendments made by this subsection shall apply to requests made after the later of December 31, 1998, or the 60th day after the Secretary of the Treasury first issues the regulations referred to in section 6104(d)(4) of the Internal Revenue Code of 1986, as amended by this section. (B) PUBLICATION OF ANNUAL RETURNS.— Section 6104(d) of such Code, as in effect before the amendments made by this subsection, shall not apply to any return the due date for which is after the date such amendments take effect under subparagraph (A). SEC. 1005. SUBPART F EXEMPTION FOR ACTIVE FINANCING INCOME. (a) INCOME DERIVED FROM BANKING, FINANCING, OR SIMILAR BUSINESSES. —Section 954(h) (relating to income derived in the active conduct of banking, financing, or similar businesses) is amended to read as follows: "(h) SPECIAL RULE FOR INCOME DERIVED IN THE ACTIVE CON- DUCT OF BANKING, FINANCING, OR SIMILAR BUSINESSES.— "(1) IN GENERAL.—For purposes of subsection (c)(1), foreign personal holding company income shall not include qualified banking or financing income of an eligible controlled foreign corporation. " (2) ELIGIBLE CONTROLLED FOREIGN CORPORATION. — For purposes of this subsection— "(A) IN GENERAL.—The term 'eligible controlled foreign corporation' means a controlled foreign corporation which— "(i) is predominantly engaged in the active conduct of a banking, financing, or similar business, and "(ii) conducts substantial activity with respect to such business. "(B) PREDOMINANTLY ENGAGED. — A controlled foreign corporation shall be treated as predominantly engaged in the active conduct of a banking, financing, or similar business if— "(i) more than 70 percent of the gross income of the controlled foreign corporation is derived directly from the active and regular conduct of a lending or finance business from transactions with customers which are not related persons, "(ii) it is engaged in the active conduct of a banking business and is an institution licensed to do business as a bank in the United States (or is any other

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