Page:United States Statutes at Large Volume 112 Part 4.djvu/920

 112 STAT. 2681-891 PUBLIC LAW 105-277—OCT. 21, 1998 corporation not so licensed which is specified by the Secretary in regulations), or "(iii) it is engaged in the active conduct of a securities business and is registered as a securities broker or dealer under section 15(a) of the Securities Exchange Act of 1934 or is registered as a Government securities broker or dealer under section 15C(a) of such Act (or is any other corporation not so registered which is specified by the Secretary in regulations). "(3) QUALIFIED BANKING OR FINANCING INCOME. —For purposes of this subsection— "(A) IN GENERAL.— The term 'qualified banking or financing income' means income of an eligible controlled foreign corporation which— "(i) is derived in the active conduct of a banking, financing, or similar business by— "(I) such eligible controlled foreign corporation, or "(11) a qualified business unit of such eligible controlled foreign corporation, "(ii) is derived from one or more transactions— "(I) with customers located in a country other than the United States, and "(II) substantially all of the activities in connection with which are conducted directly by the corporation or unit in its home country, and "(iii) is treated as earned by such corporation or unit in its home country for purposes of such country's tax laws. "(B) LIMITATION ON NONBANKING AND NONSECURITIES BUSINESSES.—No income of an eligible controlled foreign corporation not described in clause (ii) or (iii) of paragraph (2)(B) (or of a qualified business unit of such corporation) shall be treated as qualified banking or financing income unless more than 30 percent of such corporation's or unit's gross income is derived directly from the active and regular conduct of a lending or finance business from transactions with customers which are not related persons and which are located within such corporation's or unit's home country. " (C) SUBSTANTL\L ACTIVITY REQUIREMENT FOR CROSS BORDER INCOME.— The term 'qualified banking or financing income' shall not include income derived from 1 or more transactions with customers located in a country other than the home country of the eligible controlled foreign corporation or a qualified business unit of such corporation unless such corporation or unit conducts substantial activity with respect to a banking, financing, or similar business in its home country. "(D) DETERMINATIONS MADE SEPARATELY. —For purposes of this paragraph, the qualified banking or financing income of an eligible controlled foreign corporation and each qualified business unit of such corporation shall be determined separately for such corporation and each such unit by taking into account— "(i) in the case of the eligible controlled foreign corporation, only items of income, deduction, gain, or

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