Page:United States Statutes at Large Volume 80 Part 1.djvu/1605

 80 STAT.]

PUBLIC LAW 89-809-NOV. 13, 1966

1569

" (B) in the case of a foreign corporation, such corporation was created or organized under the law of such foreign country or possession or is domiciled for tax purposes in such country or possession. "(2) For purposes of subsection (a), in applying section 904 68A Stat. 287. the taxpayer's taxable income shall be treated as consisting only of the taxable income effectively connected with the taxpayer's conduct of a trade or business within the United States. "(3) The credit allowed pursuant to subsection (a) shall not be allowed against any tax imposed by section 871(a) (relating to Ante, p. 1547. income of nonresident alien individual not connected with United States business) or 881 (relating to income of foreign corporations Ante, p. 1555. not connected with United States business). " (4) For purposes of sections 902(a) and 78, a foreign corpora- ^JQ\ S*^* ^^^' tion choosing the benefits of this subpart which receives dividends shall, with respect to such dividends, be treated as a domestic corporation." (2) The table of sections for such subpart A is amended by adding at the end thereof the following: "Sec. 906. Nonresident alien individuals and foreign corporations."

(3) Section 874(c) is amended by strikingxjut "(c) FOREIGN TAX CREDIT NOT ALLOWED.—A nonresident" and inserting in lieu thereof the following: "(c) FOREIGN TAX CREDIT.—Except as provided in section 906, a nonresident". (4) Subsection (b) of section 901 (relating to amount allowed) is amended by redesignating paragraph (4) as paragraph (5), and by inserting after paragraph (3) the following new paragraph: "(4)

NONRESIDENT ALIEN INDIVIDUALS AND FOREIGN CORPORA-

TIONS.—In the case of any nonresident alien individual not described in section 876 and in the case of any foreign corporation, the amount determined pursuant to section 906; and". (5) Paragraph (5) (as redesignated) of section 901(b) is amended by striking out "or (3)," and inserting in lieu thereof " (3), or (4),". (6) The amendments made by this subsection shall apply with respect to taxable years beginning after December 31, 1966. In applying section 904 of the Internal Revenue Code of 1954 with respect to section 906 of such Code, no amount may be carried from or to any taxable year beginning before January 1, 1967, and no such year shall be taken into account. (b)

A L I E N RESIDENTS or THE UNITED STATES OR PUERTO RICO.—

(1) Paragraph (3) of section 901(b) (relating to amount of foreign tax credit allowed in case of alien resident of the United States or Puerto Rico) is amended by striking o u t ", if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country". (2) Section 901 is amended by redesignating subsections (c) and (d) as subsections (d) and (e), and by inserting after subsection (b) the following new subsection: "(c)

SIMILAR CREDIT REQUIRED FOR CERTAIN A L I E N RESIDENTS.—

Whenever the President finds that— "(1) a foreign country, in imposing income, war profits, and excess profits taxes, does not allow to citizens of the United States residing in such foreign country a credit for any such taxes paid

68A Stat. 28i Ante, p. i568

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