Page:United States Statutes at Large Volume 118.djvu/1525

 118 STAT. 1495 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(C) TREATMENT OF FINANCIAL SERVICES INCOME AND COMPANIES.— ‘‘(i) IN GENERAL.—Financial services income shall be treated as general category income in the case of— ‘‘(I) a member of a financial services group, and ‘‘(II) any other person if such person is predominantly engaged in the active conduct of a banking, insurance, financing, or similar busi ness. ‘‘(ii) FINANCIAL SERVICES GROUP.—The term ‘finan cial services group’ means any affiliated group (as defined in section 1504(a) without regard to paragraphs (2) and (3) of section 1504(b)) which is predominantly engaged in the active conduct of a banking, insurance, financing, or similar business. In determining whether such a group is so engaged, there shall be taken into account only the income of members of the group that are— ‘‘(I) United States corporations, or ‘‘(II) controlled foreign corporations in which such United States corporations own, directly or indirectly, at least 80 percent of the total voting power and value of the stock. ‘‘(iii) PASS THRU ENTITIES.—The Secretary shall by regulation specify for purposes of this subparagraph the treatment of financial services income received or accrued by partnerships and by other pass thru entities which are not members of a financial services group.’’. (e) TREATMENT OF INCOME TAX BASE DIFFERENCES.—Paragraph (2) of section 904(d) is amended by redesignating subparagraphs (H) and (I) as subparagraphs (I) and (J), respectively, and by inserting after subparagraph (G) the following new subparagraph: ‘‘(H) TREATMENT OF INCOME TAX BASE DIFFERENCES.— ‘‘(i) IN GENERAL.—In the case of taxable years beginning after December 31, 2006, tax imposed under the law of a foreign country or possession of the United States on an amount which does not constitute income under United States tax principles shall be treated as imposed on income described in paragraph (1)(B). ‘‘(ii) SPECIAL RULE FOR YEARS BEFORE 2007.— ‘‘(I) IN GENERAL.—In the case of taxes paid or accrued in taxable years beginning after December 31, 2004, and before January 1, 2007, a taxpayer may elect to treat tax imposed under the law of a foreign country or possession of the United States on an amount which does not con stitute income under United States tax principles as tax imposed on income described in subpara graph (C) or (I) of paragraph (1). ‘‘(II) ELECTION IRREVOCABLE.—Any such elec tion shall apply to the taxable year for which made and all subsequent taxable years described in sub clause (I) unless revoked with the consent of the Secretary.’’. (f) CONFORMING AMENDMENTS.— Applicability. Regulations.

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