Page:United States Statutes at Large Volume 118.djvu/1536

 118 STAT. 1506 PUBLIC LAW 108–357—OCT. 22, 2004 (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2004, and to taxable years of United States share holders with or within which such taxable years of foreign corpora tions end. SEC. 413. REPEAL OF FOREIGN PERSONAL HOLDING COMPANY RULES AND FOREIGN INVESTMENT COMPANY RULES. (a) GENERAL RULE.—The following provisions are hereby repealed: (1) Part III of subchapter G of chapter 1 (relating to foreign personal holding companies). (2) Section 1246 (relating to gain on foreign investment company stock). (3) Section 1247 (relating to election by foreign investment companies to distribute income currently). (b) EXEMPTION OF FOREIGN CORPORATIONS FROM PERSONAL HOLDING COMPANY RULES.— (1) IN GENERAL.—Subsection (c) of section 542 (relating to exceptions) is amended— (A) by striking paragraph (5) and inserting the fol lowing: ‘‘(5) a foreign corporation,’’, (B) by striking paragraphs (7) and (10) and by redesig nating paragraphs (8) and (9) as paragraphs (7) and (8), respectively, (C) by inserting ‘‘and’’ at the end of paragraph (7) (as so redesignated), and (D) by striking ‘‘; and’’ at the end of paragraph (8) (as so redesignated) and inserting a period. (2) TREATMENT OF INCOME FROM PERSONAL SERVICE CON TRACTS.—Paragraph (1) of section 954(c) is amended by adding at the end the following new subparagraph: ‘‘(I) PERSONAL SERVICE CONTRACTS.— ‘‘(i) Amounts received under a contract under which the corporation is to furnish personal services if— ‘‘(I) some person other than the corporation has the right to designate (by name or by descrip tion) the individual who is to perform the services, or ‘‘(II) the individual who is to perform the serv ices is designated (by name or by description) in the contract, and ‘‘(ii) amounts received from the sale or other dis position of such a contract. This subparagraph shall apply with respect to amounts received for services under a particular contract only if at some time during the taxable year 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such serv ices.’’. (c) CONFORMING AMENDMENTS.— (1) Section 1(h) is amended— Applicability. 26 USC 551–558. 26 USC 954 note.

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