Page:United States Statutes at Large Volume 80 Part 1.djvu/1607

 80 STAT.]

PUBLIC LAW 89-809-NOV. 13, 1966

(B) by adding at the end thereof the following new sentence: " For purposes of subparagraph (C), stock owned, directly or indirectly, by or for a foreign corporation shall be considered as being proportionately owned by its shareholders." (2) The amendments made by paragraph (1) shall apply to interest received after December 31, 1965, in taxable years ending after such date. SEC. 107. AMENDMENT TO PRESERVE EXISTING LAW ON DEDUCTIONS UNDER SECTION 931. (a) DEDUCTIONS.—Subsection (d) of section 931 (relating to deduce tions) is amended to read as follows:

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" (d) DEDUCTIONS.— "(1) GENERAL RULE.—Except as otherwise provided in this sub-

section and subsection (e), in the case of persons entitled to the benefits of this section the deductions shall be allowed only if and to the extent that they are connected with income from sources within the United States; and the proper apportionment and allocation of the deductions with respect to sources of income within and without the United States shall be determined as provided in part I, under regulations prescribed by the Secretary or his delegate. "(2) EXCEPTIONS.—The following deductions shall be allowed whether or not they are connected with income from sources within the United States: " (A) The deduction, for losses not connected with the trade or business if incurred in transactions entered into for profit, allowed by section 165(c)(2), but only if the profit, if suclji transaction had resulted in a profit, would be taxable under this subtitle. " (B) The deduction, for losses of property not connected with the trade or business if arising from certain casualties or theft, allowed by section 165(c)(3), but only if the loss is of property within the United States. " (C) The deduction for charitable contributions and gifts allowed by section 170.

26 USC 861-864.

78 Stat. 4 3.

" (3) DEDUCTION DISALLOWED.—

"For disallowance of standard deduction, see section 142(b)(2)." (b) EEFECTIVE DAI"E.—The amendment made by this section shall apply with respect to taxable years beginning after December 31, 1966. SEC. 108. ESTATES OF NONRESIDENTS NOT CITIZENS. (a) RATE OF TAX.—Subsection (a) of section 2101 (relating to tax

imposed in case of estates of nonresidents not citizens) is amended to read as follows: " (a) RATE or TAX.—Except as provided in section 2107, a tax

computed in accordance with the following table is hereby imposed on the transfer of the taxable estate, determmed as provided' in section 2106, of every decedent nonresident not a citizen of the United States: "If the taxable estate is: The tax shall be: Not over $100,000 5% of the taxable estate. Over $100,000 but not over $500,000 Over $500,000 but not over $1,000,000 Over $1,000,000 but not over $2,000,000 Over $2,000,000

$5,000, plus 10% of excess over $100,000. $45,000, plus 15% of excess over $500,000. $120,000, plus 20% of excess over $1,000,000. $320,000, plus 25% of excess over $2,000,000."

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