Page:United States Statutes at Large Volume 118.djvu/1533

 118 STAT. 1503 PUBLIC LAW 108–357—OCT. 22, 2004 loss attributable to transactions after October 31 of such year, and any such net capital loss or net short term capital loss shall be treated as arising on the 1st day of the next taxable year. To the extent provided in regulations, clause (ii) shall apply also for purposes of computing the taxable income of the regulated investment company.’’. (2) FOREIGN CORPORATIONS.—Section 881 (relating to tax on income of foreign corporations not connected with United States business) is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the fol lowing new subsection: ‘‘(e) TAX NOT TO APPLY TO CERTAIN DIVIDENDS OF REGULATED INVESTMENT COMPANIES.— ‘‘(1) INTEREST RELATED DIVIDENDS.— ‘‘(A) IN GENERAL.—Except as provided in subparagraph (B), no tax shall be imposed under paragraph (1) of sub section (a) on any interest related dividend (as defined in section 871(k)(1)) received from a regulated investment company. ‘‘(B) EXCEPTION.—Subparagraph (A) shall not apply— ‘‘(i) to any dividend referred to in section 871(k)(1)(B), and ‘‘(ii) to any interest related dividend received by a controlled foreign corporation (within the meaning of section 957(a)) to the extent such dividend is attrib utable to interest received by the regulated investment company from a person who is a related person (within the meaning of section 864(d)(4)) with respect to such controlled foreign corporation. ‘‘(C) TREATMENT OF DIVIDENDS RECEIVED BY CON TROLLED FOREIGN CORPORATIONS.—The rules of subsection (c)(5)(A) shall apply to any (within the meaning of section 957(a)) to the extent such dividend is attributable to interest received by the regulated investment company which is described in clause (ii) of section 871(k)(1)(E) (and not described in clause (i) or (iii) of such section). ‘‘(2) SHORT TERM CAPITAL GAIN DIVIDENDS.—No tax shall be imposed under paragraph (1) of subsection (a) on any short term capital gain dividend (as defined in section 871(k)(2)) received from a regulated investment company.’’. (3) WITHHOLDING TAXES.— (A) Section 1441(c) (relating to exceptions) is amended by adding at the end the following new paragraph: ‘‘(12) CERTAIN DIVIDENDS RECEIVED FROM REGULATED INVESTMENT COMPANIES.— ‘‘(A) IN GENERAL.—No tax shall be required to be deducted and withheld under subsection (a) from any amount exempt from the tax imposed by section 871(a)(1)(A) by reason of section 871(k). ‘‘(B) SPECIAL RULE.—For purposes of subparagraph (A), clause (i) of section 871(k)(1)(B) shall not apply to any dividend unless the regulated investment company knows that such dividend is a dividend referred to in such clause. A similar rule shall apply with respect to the exception contained in section 871(k)(2)(B).’’. Applicability. Applicability.

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