Page:United States Statutes at Large Volume 118.djvu/1593

 118 STAT. 1563 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(B) SURROGATE FOREIGN CORPORATION.—A foreign cor poration shall be treated as a surrogate foreign corporation if, pursuant to a plan (or a series of related transactions)— ‘‘(i) the entity completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties consti tuting a trade or business of a domestic partnership, ‘‘(ii) after the acquisition at least 60 percent of the stock (by vote or value) of the entity is held— ‘‘(I) in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or ‘‘(II) in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partner ship, and ‘‘(iii) after the acquisition the expanded affiliated group which includes the entity does not have substan tial business activities in the foreign country in which, or under the law of which, the entity is created or organized, when compared to the total business activi ties of such expanded affiliated group. An entity otherwise described in clause (i) with respect to any domestic corporation or partnership trade or busi ness shall be treated as not so described if, on or before March 4, 2003, such entity acquired directly or indirectly more than half of the properties held directly or indirectly by such corporation or more than half of the properties constituting such partnership trade or business, as the case may be. ‘‘(3) COORDINATION WITH SUBSECTION (b).—Paragraph (1) shall not apply to any entity which is treated as a domestic corporation under subsection (b). ‘‘(b) INVERTED CORPORATIONS TREATED AS DOMESTIC CORPORA TIONS.—Notwithstanding section 7701(a)(4), a foreign corporation shall be treated for purposes of this title as a domestic corporation if such corporation would be a surrogate foreign corporation if subsection (a)(2) were applied by substituting ‘80 percent’ for ‘60 percent’. ‘‘(c) DEFINITIONS AND SPECIAL RULES.— ‘‘(1) EXPANDED AFFILIATED GROUP.—The term ‘expanded affiliated group’ means an affiliated group as defined in section 1504(a) but without regard to section 1504(b)(3), except that section 1504(a) shall be applied by substituting ‘more than 50 percent’ for ‘at least 80 percent’ each place it appears. ‘‘(2) CERTAIN STOCK DISREGARDED.—There shall not be taken into account in determining ownership under subsection (a)(2)(B)(ii)— ‘‘(A) stock held by members of the expanded affiliated group which includes the foreign corporation, or ‘‘(B) stock of such foreign corporation which is sold in a public offering related to the acquisition described in subsection (a)(2)(B)(i).

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