Page:United States Statutes at Large Volume 124.djvu/2428

 124 STAT. 2402 PUBLIC LAW 111–226—AUG. 10, 2010 ‘‘(II) the active foreign business percentage for such taxable year shall equal the weighted average percentage determined under subclause (I). ‘‘(2) ACTIVE FOREIGN BUSINESS PERCENTAGE.—Except as provided in paragraph (1)(B)(iv), the term ‘active foreign busi- ness percentage’ means, with respect to any existing 80/20 company, the percentage which— ‘‘(A) the active foreign business income of such company for the testing period, is of ‘‘(B) the gross income of such company for the testing period from all sources. ‘‘(3) AGGREGATION RULES.—For purposes of applying para- graph (1) (other than subparagraphs (A)(i) and (B)(iv) thereof) and paragraph (2)— ‘‘(A) IN GENERAL.—The corporation referred to in para- graph (1)(A) and all of such corporation’s subsidiaries shall be treated as one corporation. ‘‘(B) SUBSIDIARIES.—For purposes of subparagraph (A), the term ‘subsidiary’ means any corporation in which the corporation referred to in subparagraph (A) owns (directly or indirectly) stock meeting the requirements of section 1504(a)(2) (determined by substituting ‘50 percent’ for ‘80 percent’ each place it appears and without regard to section 1504(b)(3)). ‘‘(4) REGULATIONS.—The Secretary may issue such regula- tions or other guidance as is necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which provide for the proper application of the aggregation rules described in paragraph (3).’’. (c) CONFORMING AMENDMENTS.— (1) Section 861 of the Internal Revenue Code of 1986 is amended by striking subsection (c) and by redesignating sub- sections (d), (e), and (f) as subsections (c), (d), and (e), respec- tively. (2) Paragraph (9) of section 904(h) of such Code is amended to read as follows: ‘‘(9) TREATMENT OF CERTAIN DOMESTIC CORPORATIONS.— In the case of any dividend treated as not from sources within the United States under section 861(a)(2)(A), the corporation paying such dividend shall be treated for purposes of this subsection as a United States-owned foreign corporation.’’. (3) Subsection (c) of section 2104 of such Code is amended in the last sentence by striking ‘‘or to a debt obligation of a domestic corporation’’ and all that follows and inserting a period. (d) EFFECTIVE DATE.— (1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2010. (2) GRANDFATHER RULE FOR OUTSTANDING DEBT OBLIGA- TIONS.— (A) IN GENERAL.—The amendments made by this sec- tion shall not apply to payments of interest on obligations issued before the date of the enactment of this Act. (B) EXCEPTION FOR RELATED PARTY DEBT.—Subpara- graph (A) shall not apply to any interest which is payable 26 USC 861 note. 26 USC 2104. 26 USC 904. 26 USC 861. Applicability.