Page:United States Statutes at Large Volume 117.djvu/780

 PUBLIC LAW 108–27—MAY 28, 2003

117 STAT. 761

‘‘(II) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. ‘‘(C) QUALIFIED FOREIGN CORPORATIONS.— ‘‘(i) IN GENERAL.—Except as otherwise provided in this paragraph, the term ‘qualified foreign corporation’ means any foreign corporation if— ‘‘(I) such corporation is incorporated in a possession of the United States, or ‘‘(II) such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program. ‘‘(ii) DIVIDENDS ON STOCK READILY TRADABLE ON UNITED STATES SECURITIES MARKET.—A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States. ‘‘(iii) EXCLUSION OF DIVIDENDS OF CERTAIN FOREIGN CORPORATIONS.—Such term shall not include any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or a passive foreign investment company (as defined in section 1297). ‘‘(iv) COORDINATION WITH FOREIGN TAX CREDIT LIMITATION.—Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph. ‘‘(D) SPECIAL RULES.— ‘‘(i) AMOUNTS TAKEN INTO ACCOUNT AS INVESTMENT INCOME.—Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B). ‘‘(ii) EXTRAORDINARY DIVIDENDS.—If an individual receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss. ‘‘(iii) TREATMENT OF DIVIDENDS FROM REGULATED

Applicability.

INVESTMENT COMPANIES AND REAL ESTATE INVESTMENT TRUSTS.—A dividend received from a regulated invest-

ment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857.’’.

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