Page:United States Statutes at Large Volume 76.djvu/1056

 1008

PUBLIC LAW 8 7 - 8 3 4 - O C T. 16, 1962

[76 STAT.

"SEC. 952. SUBPART F INCOME DEFINED. " (a) IN GENERAL.—For purposes of this subpart, the term 'subpart F income' means, in the case of any controlled foreign corporation, the sum of— "(1) the income derived from the insurance of United States Intra. risks (as determined under section 953), and "(2) the foreign base company income (as determined under section 954). " (b) EXCLUSION OF UNITED STATES INCOME.—Subpart F income does not include any item includible in gross income under this chapter (other than this subpart) as income derived from sources within the United States of a foreign corporation engaged in trade or business in the United States. "(c) LIMITATION.—For purposes of subsection (a), the subpart F income of any controlled foreign corporation for any taxable year shall not exceed the earnings and profits of such corporation for such year I'educed by the amount (if any) by which— "(1) an amount equal to— " (A) the sum of the deficits in earnings and profits for prior taxable years beginning after December 31, 1962, plus " (B) the sum of the deficits in earnings and profits for taxable years beginning after December 31, 1959, and before January 1, 1963 (reduced by the sum of the earnings and profits for such taxable years); exceeds " (2) an amount equal to the sum of the earnings and profits for prior taxable years beginning after December 31, 1962, allocated Poat. p. 1020. to other earnings and profits under section 959(c)(3). For purposes of the preceding sentence, any deficit in earnings and profits for any prior taxable year shall be taken into account under paragraph (1) for any taxable year only to the extent it has not been taken into account under such paragraph for any preceding taxable year to reduce earnings and profits of such preceding year. " (d) SPECIAL RULE IN CASE or INDIRECT OWNERSHIP.—For purposes

of subsection (c), if— "(1) a United States shareholder owns (within the meaning of section 958(a)) stock of a foreign corporation, and by reason of such ownership owns (within the meaning of such section) stock of any other foreign corporation, and "(2) any of such foreign corporations has a deficit in earnings and profits for the taxable year, then the earnings and profits for the taxable year of each such foreign corporation which is a controlled foreign corporation shall, with respect to such United States shareholder, be properly reduced to take into account any deficit described in paragraph (2) in such manner as the Secretary or his delegate shall prescribe by regulations. "SEC. 953. INCOME FROM INSURANCE OF UNITED STATES RISKS. " (a) GENERAL RULE. — For purposes of section 952(a)(1), the term 'income derived from the insurance of United States risks' means that income which—, "(1) is attributable to the reinsurance or the issuing of any insurance or annuity contract— " (A) in connection with property in, or liability arising out of activity in, or in connection with the lives or health of residents of, the United States, or " (B) in connection with risks not included in subparagraph (A) as the result of any arrangement whereby another corporation receives a substantially equal amount of premiums or other consideration in respect to any reinsurance or the issuing of any insurance or annuity contract in connection

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