Page:United States Statutes at Large Volume 76.djvu/1059

 76 STAT. ]

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

1011

" (c) FOREIGN PERSONAL HOLDING COMPANY INCOME.—

" (1) IN GENERAL.—For purposes of subsection (a)(1), the term 'foreign personal holding company income' means the foreign personal holding company income (as defined in section 553), modified and adjusted as provided in paragraphs (2), (3), and (4). " (2) RENTS INCLUDED WITHOUT REGARD TO 50 PERCENT LIMITA-

TION.—For purposes of paragraph (1), all rents shall be included in foreign personal holding company income without regard to whether or not such rents constitute 50 percent or more of gross income. " (3) CERTAIN INCOME DERIVED I N ACTIVE CONDUCT OF TRADE OR

BUSINESS.—For purposes of paragraph (1), foreign personal holding company income does not include— " (A) rents and royalties which are derived in the active conduct of a trade or business and which are received from a person other than a related person (within the meaning of subsection (d)(3)), or " (B) dividends, interest, and gains from the sale or exchange of stock or securities derived in the conduct of a banking, financing, or similar business, or derived from the investments made by an insurance company of its unearned premiums or reserves ordinary and necessary for the proper conduct of its insurance business, and which are received from a person other than a related person (within the meaning of subsection (d)(3)). " (4) CERTAIN INCOME RECEIVED FROM RELATED PERSONS.—For

purposes of paragraph (1), foreign personal holding company income does not include— " (A) dividends and interest received from a related pereon which (i) is created or Organized under the laws of the same foreign country under the laws of which the controlled forei^i corporation is created or organized, and (ii) has a substantial part of its assets used in its trade or business located in such same foreign country; " (B) interest received in the conduct of a banking, financing, or similar business from a related person engaged in the conduct of a banking, financing, or similar business if the businesses of the recipient and the payor are predominantly with persons other than related persons; and " (C) rents, royalties, and similar amounts received from a related person for the use of, or the privilege of using, property within the country under the laws of which the controlled foreign corporation is created or organized. " (d) FOREIGN BASE COMPANY SALES INCOME.—

"(1) IN GENERAL.—For purposes of subsection (a)(2), the term 'foreign base company sales income" means income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with the purchase of personal property from a related person and its sale to any person, the sale of personal property to any person on behalf of a related person, the purchase of personal property from any person and its sale to a related person, or the purchase of personal property from any person on behalf of a related person where— " (A) the property which is purchased (or in the case of property sold on behalf of a related person, the property which is sold) is manufactured, produced, grown, or extracted outside the country under the laws of which the controlled foreign corporation is created or organized, and

26 USC 553.

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