Page:United States Statutes at Large Volume 76.djvu/1055

 76 STAT. ]

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PUBLIC LAW 87-834-OCT. 16, 1962

" (A) which would have been distributed with respect to the stock which such shareholder owns (within the meaning of section 958(a)) in such corporation if on the last day, in its taxable year, on which the corporation is a controlled foreign corporation it had distributed pro rata to its shareholders an amount (i) which bears the same ratio to its subpart F income for the taxable year, as (ii) the part of such year during which the corporation is a controlled foreign corporation bears to the entire year, reduced by " (B) the amount of distributions received by any other person during such year as a dividend with respect to such stock, but only to the extent of the dividend which would have been received if the distribution by the corporation had been the amount (i) which bears the same ratio to the subpart F income of such corporation for the taxable year, as (ii) the part of such year during which such shareholder did not own (within the meaning of section 958(a)) such stock bears to the entire year.

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" (3) LIMITATION ON PRO RATA SHARE OF PREVIOUSLY EXCLUDED SUBPART F I N C O M E WITHDRAWN FROM INVESTMENT.—FOT purpOSeS

of paragraph (1)(A) (ii), the pro rata share of any United States shareholder of the previously excluded subpart F income of a controlled foreign corporation withdrawn from investment in less developed countries shall not exceed an amount (A) which bears the same ratio to his pro rata share of such income withdrawn (as determined under section 955(a)(3)) for the taxable year, as (B) the part of such year during which the corporation IS a controlled foreign corporation bears to the entire year. "(4)

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LIMITATION ON PRO RATA SHARE OF INVESTMENT I N UNITED

STATES PROPERTY.—FoT purposes of paragraph (1)(B), the pro rata share of any United States shareholder in the increase of the earnings of a controlled foreign corporation invested in United States property shall not exceed an amount (A) which bears the same ratio to his pro rata share of such increase (as determined under section 956(a)(2)) for the taxable ^ear, as (B) the part of such year during which the corporation is a controlled foreign corporation bears to the entire year. " (b) UNITED STATES SHAREHOLDER DEFINED.—For purposes of this subpart, the term 'United States shareholder' means, with respect to any foreign corporation, a United States person (as defined in section 957(d)) who owns (within the meaning of section 958(a)), or is considered as owning by applying the rules of ownership of section 958(b), 10 percent or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation. "(c) COORDINATION W I T H ELECTION OF A FOREIGN INVESTMENT COM-

PANY To DISTRIBUTE INCOME.—^A United States shareholder Who, for

his taxable year, is a qualified shareholder (within the meaning of section 1247(c)) of a foreign investment company with respect to which an election under section 1247 is in effect shall not be required to include in gross income, for such taxable year, any amount under subsection (a) with respect to such company. "(d)

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COORDINATION W I T H FOREIGN PERSONAL HOLDING COMPANY

PROVISIONS.—^A United States shareholder who, for his taxable year, is subject to tax under section 651(b) (relating to foreign personal holding company income included in gross income of United States shareholders) on income of a controlled foreign corporation shall not be required to include in gross income, for such taxable year, any amount under subsection (a) with respect to such company.

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