Page:United States Statutes at Large Volume 118.djvu/1545

 118 STAT. 1515 PUBLIC LAW 108–357—OCT. 22, 2004 shareholder receives a cash distribution from a controlled for eign corporation which is excluded from gross income under section 959(a), such distribution shall be treated for purposes of this section as a cash dividend to the extent of any amount included in income by such United States shareholder under section 951(a)(1)(A) as a result of any cash dividend during such taxable year to— ‘‘(A) such controlled foreign corporation from another controlled foreign corporation that is in a chain of owner ship described in section 958(a), or ‘‘(B) any other controlled foreign corporation in such chain of ownership, but only to the extent of cash distribu tions described in section 959(b) which are made during such taxable year to the controlled foreign corporation from which such United States shareholder received such dis tribution. ‘‘(b) LIMITATIONS.— ‘‘(1) IN GENERAL.—The amount of dividends taken into account under subsection (a) shall not exceed the greater of— ‘‘(A) $500,000,000, ‘‘(B) the amount shown on the applicable financial statement as earnings permanently reinvested outside the United States, or ‘‘(C) in the case of an applicable financial statement which fails to show a specific amount of earnings perma nently reinvested outside the United States and which shows a specific amount of tax liability attributable to such earnings, the amount equal to the amount of such liability divided by 0.35. The amounts described in subparagraphs (B) and (C) shall be treated as being zero if there is no such statement or such statement fails to show a specific amount of such earnings or liability, as the case may be. ‘‘(2) DIVIDENDS MUST BE EXTRAORDINARY.—The amount of dividends taken into account under subsection (a) shall not exceed the excess (if any) of— ‘‘(A) the dividends received during the taxable year by such shareholder from controlled foreign corporations, over ‘‘(B) the annual average for the base period years of— ‘‘(i) the dividends received during each base period year by such shareholder from controlled foreign cor porations, ‘‘(ii) the amounts includible in such shareholder’s gross income for each base period year under section 951(a)(1)(B) with respect to controlled foreign corpora tions, and ‘‘(iii) the amounts that would have been included for each base period year but for section 959(a) with respect to controlled foreign corporations. The amount taken into account under clause (iii) for any base period year shall not include any amount which is not includible in gross income by reason of an amount described in clause (ii) with respect to a prior taxable year. Amounts described in subparagraph (B) for any base period year shall be such amounts as shown on the most recent return filed for such year; except that amended

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