Page:United States Statutes at Large Volume 76.djvu/1064

 1016

Ante, p. 1013.

Post, p. 1019.

Post, p. 1018.

PUBLIC LAW 87-834-OCT. 16, 1962

[76 STAT.

corporation at the close of the taxable year, to the extent such amount would have constituted a dividend (determined after the application of section 955(a)) if it had been distributed. " (2) PRO RATA SHARE or INCREASE FOR YEAR.^—In the case of any United States shareholder, the pro rata share of the increase for any taxable year in the earnings of a controlled foreign corporation invested in United States property is the amount determined by subtracting his pro rata share of— " (A) the amount determined under paragraph (1) for the close of the preceding taxable year, reduced by amounts paid during such preceding taxable year to which section 959(c)(1) applies, from " (B) the amount determined under paragraph (1) for the close of the taxable year. TliQ determinations under subparagraphs (A) and (B) shall be made on the basis of stock owned (within the meaning of section 958(a)) by such United States shareholder on the last day during the taxable year on which the foreign corporation is a controlled foreign corporation. "(3) AMOUNT ATTRIBUTABLE TO PROPERTY.—The amount taken into account under paragraph (1) or (2) with respect to any property shall be its adjusted basis, reduced Ijy any liability to which the property is subject, (b) UNITED STATES PROPERTY DEFINED.—

"(1) IN GENERAL.—For purposes of subsection (a), the term 'United States property' means any property acquired after December 31, 1962, which is— " (A) tangible property located in the United States; " (B) stock of a domestic corporation; " (C) an obligation of a United States person; or " (D) any right to the use in the United States of— " (i) a patent or copyright, "(ii) an invention, model, or design (whether or not patented). "Hii) a secret formula or process, or "(iv)) any other similar property right, which is acquired or developed by the controlled foreign corporation for use in the United States. "(2) EXCEPTIONS.—For purposes of subsection (a), the term 'United States property' does not include— " (A) obligations of the United States, money, or deposits with persons carrying on the banking business; " (B) property located in the United States which is purchased in the United States for export to, or use in, foreign countries; " (C) any obligation of a United States person arising in connection with the sale or processing of property if the amount of such obligation outstanding at no time during the taxable year exceeds the amount which would be ordinary and necessary to carry on the trade or business of both the other party to the sale or processing transaction and the United States person had the sale or processing transaction been made between unrelated persons; " (D) any aircraft, railroad rolling stock, vessel, motor vehicle, or container used in the transportation of persons or property in foreign commerce and used predominantly outside the United States; " (E) an amount of assets of an insurance company equivalent to the unearned premiums or reserves ordinary and necessary for the proper conduct of its insurance business

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