Page:United States Statutes at Large Volume 114 Part 4.djvu/368

 114 STAT. 2430 PUBLIC LAW 106-519—NOV. 15, 2000 (a) and (b) of section 52 shall be made without regard to section 1563(b). "(4) GROSS AND TAXABLE INCOME. —Section 114 shall not be taken into account in determining the amount of gross income or foreign trade income from any transaction. "(c) SOURCE RULE. — Under regulations, in the case of qualifying foreign trade property manufactured, produced, grown, or extracted within the United States, the amount of income of a taxpayer from any sales transaction with respect to such property which is treated as from sources without the United States shall not exceed— "(1) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(B), the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States if the foreign trade income were reduced by an amount equal to 4 percent of the foreign trading gross receipts with respect to the transaction, and "(2) in the case of a taxpayer computing its qualifying foreign trade income under section 941(a)(1)(C), 50 percent of the amount of the taxpayer's foreign trade income which would (but for this subsection) be treated as from sources without the United States. "(d) TREATMENT OF WITHHOLDING TAXES.— "(1) IN GENERAL.—For purposes of section 114(d), any withholding tax shall not be treated as paid or accrued with respect to extraterritorial income which is excluded from gross income under section 114(a). For purposes of this paragraph, the term 'withholding tax' means any tax which is imposed on a basis other than residence and for which credit is allowable under section 901 or 903. "(2) EXCEPTION.— Paragraph (1) shall not apply to any taxpayer with respect to extraterritorial income from any transaction if the taxpayer computes its qualifying foreign trade income with respect to the transaction under section 941(a)(1)(A). "(e) ELECTION TO BE TREATED AS DOMESTICORPORATION. — "(1) IN GENERAL.— An applicable foreign corporation may elect to be treated as a domestic corporation for all purposes of this title if such corporation waives all benefits to such corporation granted by the United States under any treaty. No election under section 1362(a) may be made with respect to such corporation. "(2) APPLICABLE FOREIGN CORPORATION.— For purposes of paragraph (1), the term 'applicable foreign corporation' means any foreign corporation if— "(A) such corporation manufactures, produces, grows, or extracts property in the ordinary course of such corporation's trade or business, or "(B) substantially all of the gross receipts of such corporation are foreign trading gross receipts. "(3) PERIOD OF ELECTION.— Applicability. "(A) IN GENERAL.— Except as otherwise provided in this paragraph, an election under paragraph (1) shall apply to the taxable year for which made and all subsequent

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