Page:United States Statutes at Large Volume 78.djvu/868

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PUBLIC LAW 88-563-SEPT. 2, 1964

[78 STAT.

" (c) EXCEPTION FOR FOREIGN CORPORATIONS OR IT'ARTNERSHIPS FORMED OR AVAILED OF FOR TAX AVOIDANCE.—

"(1) IN GENERAL.—The provisions of subsections (a) and (b) shall be inapplicable in any case where the foreign corporation or foreign partnership is formed or availed of by the United States person for the principal purpose of acquiring, through such corporation or partnership, an interest in stock or debt obligations (of one or more other foreign issuers or obligors) the direct acquisition of which by the United States person would be subject to the tax imposed by section 4911. " (2) COMMERCIAL BANKS, UNDERWRITERS, AND REQUIRED HOLD-

INGS.—For purposes of this subsection, the acquisition by a United States person of stock or debt obligations of a foreign corporation or foreign partnership which acquires stock or debt obligations of foreign issuers or obligors— " (A) in making loans in the ordinary course of its business as a commercial bank, " (B) in the ordinary course of its business of underwriting and distributing securities issued by other persons, or " (C) to satisfy minimum requirements relating to holdings of stock or debt obligations of foreign issuers or obligors imposed by the laws of foreign countries where such foreign corporation or foreign partnership is doing business, shall not, b ^ reason of such acquisitions by the foreign corporation or foreign partnership, be considered an acquisition by the United States person of an interest in stock or debt obligations of foreign issuers or obligors. For purposes of subparagraph (A), any foreign corporation or foreign partnership which is regularly engaged in the business of accepting dejjosits from customers and receiving other borrowed funds in foreign currencies and making loans in such currencies shall be treated as a commercial bank. " (3) L o s s OF ENTITLEMENT TO EXCLUSION OR REFUND W H E R E FOREIGN CORPORATION OR PARTNERSHIP IS AVAILED OF FOR TAX

AVOIDANCE.—In any case where— " (A) the exclusion provided by subsection (a)(1) has applied with respect to the acquisition of stock or a debt obligation by a United States person, or " (B) a credit or refund of tax under subsection (a)(2) has been received by a United States person with respect to acquisitions of stock made during a calendar year, but the foreign corporation or partnership is availed of by such person (after the acquisition described in subparagraph (A) is made or the calendar year described in subparagraph (B) has ended, but before the termination date specified in section 4911 (d)) for the principal purpose described in paragraph (1) of this subsection, then liability for the tax imposed by section 4911 shall be incurred by such person (with respect to such stock or debt obligation) at the time the foreign corporation or partnership is so availed of; and the amount of such tax shall be equal (in a case described in subparagraph (A)) to the amount of tax for which such person would have been liable under such section upon his acquisition of the stock or debt obligations involved if such exclusion had not applied to such acquisition, or (in a case described in subparagraph (B)) to the aggregate amount of tax for which such person was liable under such section upon his acquisitions of the stock involved. " (d) EXCEPTION FOR ACQUISITIONS MADE W I T H I N T E N T To SELL TO UNITED STATES PERSONS.—The provisions of subsections (a) and (b)

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