Page:United States Statutes at Large Volume 118.djvu/1534

 118 STAT. 1504 PUBLIC LAW 108–357—OCT. 22, 2004 (B) Section 1442(a) (relating to withholding of tax on foreign corporations) is amended— (i) by striking ‘‘and the reference in section 1441(c)(10)’’ and inserting ‘‘the reference in section 1441(c)(10)’’, and (ii) by inserting before the period at the end the following: ‘‘, and the references in section 1441(c)(12) to sections 871(a) and 871(k) shall be treated as refer ring to sections 881(a) and 881(e) (except that for pur poses of applying subparagraph (A) of section 1441(c)(12), as so modified, clause (ii) of section 881(e)(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)’’. (b) ESTATE TAX TREATMENT OF INTEREST IN CERTAIN REGU LATED INVESTMENT COMPANIES.—Section 2105 (relating to property without the United States for estate tax purposes) is amended by adding at the end the following new subsection: ‘‘(d) STOCK IN A RIC.— ‘‘(1) IN GENERAL.—For purposes of this subchapter, stock in a regulated investment company (as defined in section 851) owned by a nonresident not a citizen of the United States shall not be deemed property within the United States in the proportion that, at the end of the quarter of such investment company’s taxable year immediately preceding a decedent’s date of death (or at such other time as the Secretary may designate in regulations), the assets of the investment company that were qualifying assets with respect to the decedent bore to the total assets of the investment company. ‘‘(2) QUALIFYING ASSETS.—For purposes of this subsection, qualifying assets with respect to a decedent are assets that, if owned directly by the decedent, would have been— ‘‘(A) amounts, deposits, or debt obligations described in subsection (b) of this section, ‘‘(B) debt obligations described in the last sentence of section 2104(c), or ‘‘(C) other property not within the United States. ‘‘(3) TERMINATION.—This subsection shall not apply to estates of decedents dying after December 31, 2007.’’. (c) TREATMENT OF REGULATED INVESTMENT COMPANIES UNDER SECTION 897.— (1) Paragraph (1) of section 897(h) is amended by striking ‘‘REIT’’ each place it appears and inserting ‘‘qualified invest ment entity’’. (2) Paragraphs (2) and (3) of section 897(h) are amended to read as follows: ‘‘(2) SALE OF STOCK IN DOMESTICALLY CONTROLLED ENTITY NOT TAXED.—The term ‘United States real property interest’ does not include any interest in a domestically controlled quali fied investment entity. ‘‘(3) DISTRIBUTIONS BY DOMESTICALLY CONTROLLED QUALI FIED INVESTMENT ENTITIES.—In the case of a domestically con trolled qualified investment entity, rules similar to the rules of subsection (d) shall apply to the foreign ownership percentage of any gain.’’. (3) Subparagraphs (A) and (B) of section 897(h)(4) are amended to read as follows: Applicability.

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