Page:United States Statutes at Large Volume 114 Part 4.djvu/361

 PUBLIC LAW 106-519—NOV. 15, 2000 114 STAT. 2423 Public Law 106-519 106th Congress An Act To amend the Internal Revenue Code of 1986 to repeal the provisions relating j- „^.. to foreign sales corporations (FSCs) and to exclude extraterritorial income from X:—'. gross income. [H.R. 4986] Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, FSC Repeal and Extraterritorial SECTION 1. SHORT TITLE. Income Exclusion (a) SHORT TITLE. —This Act may be cited as the "FSC Repeal ^6\jscTnote. and Extraterritorial Income Exclusion Act of 2000". (b) AMENDMENT OF 1986 CODE.— Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed m terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. SEC. 2. REPEAL OF FOREIGN SALES CORPORATION RULES. Subpart C of part III of subchapter N of chapter 1 (relating 26 USC 921-927. to taxation of foreign sales corporations) is hereby repealed. SEC. 3. TREATMENT OF EXTRATERRITORIAL INCOME. (a) IN GENERAL.— Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by inserting before section 115 the following new section: " SEC. 114. EXTRATERRITORIAL INCOME. "(a) EXCLUSION.— Gross income does not include extraterritorial income. "(b) EXCEPTION.— Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N. "(c) DISALLOWANCE OF DEDUCTIONS.— "(1) IN GENERAL.—Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed. "(2) ALLOCATION.— Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between— "(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and "(B) the extraterritorial income derived from such transaction which is not so excluded.

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