Page:United States Statutes at Large Volume 114 Part 4.djvu/371

 PUBLIC LAW 106-519—NOV. 15, 2000 114 STAT. 2433 any qualifying foreign trade property (as defined in section 943(a)) which is held by the taxpayer for lease or rental in the ordinary course of trade or business for use by the lessee outside the United States (as defined in section 943(b)(2)). ". (4) Section 903 is amended by striking "164(a)" and 26 USC 903. inserting "114, 164(a),". (5) Section 999(c)(1) is amended by inserting "941(a)(5)," 26 USC 999. after "908(a),". (6) The table of sections for part III of subchapter B of chapter 1 is amended by inserting before the item relating to section 115 the following new item: "Sec. 114. Extraterritorial income.". (7) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart E and inserting the following new item: "Subpart E. Qualifying foreign trade income.". (8) The table of subparts for part III of subchapter N of chapter 1 is amended by striking the item relating to subpart C. SEC. 5. EFFECTIVE DATE. 26 USC 941 note. (a) IN GENERAL. —The amendments made by this Act shall Applicability. apply to transactions after September 30, 2000. (b) No NEW FSCS; TERMINATION OF INACTIVE FSCS. — (1) NO NEW FSCS. —No corporation may elect after September 30, 2000, to be a FSC (as defined in section 922 of the Internal Revenue Code of 1986, as in effect before the amendments made by this Act). (2) TERMINATION OF INACTIVE FSCS.—I f a FSC has no foreign trade income (as defined in section 923(b) of such Code, as so in effect) for any period of 5 consecutive taxable years beginning after December 31, 2001, such FSC shall cease to be treated as a FSC for purposes of such Code for any taxable year beginning after such period. (c) TRANSITION PERIOD FOR EXISTING FOREIGN SALES CORPORA- TIONS.— (1) IN GENERAL.—In the case of a FSC (as so defined) in existence on September 30, 2000, and at all times thereafter, the amendments made by this Act shall not apply to any transaction in the ordinary course of trade or business involving a FSC which occurs— (A) before January 1, 2002; or (B) after December 31, 2001, pursuant to a binding contract— (i) which is between the FSC (or any related person) and any person which is not a related person; and (ii) which is in effect on September 30, 2000, and at all times thereafter. For purposes of this paragraph, a binding contract shall include a purchase option, renewal option, or replacement option which is included in such contract and which is enforceable against the seller or lessor. (2) ELECTION TO HAVE AMENDMENTS APPLY EARLIER. — A taxpayer may elect to have the amendments made by this Act apply to any transaction by a FSC or any related person

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