Page:United States Statutes at Large Volume 83.djvu/612

 584

PUBLIC LAW 9M72-DEC. 30, 1969

72 Stat. 1650.

" 80 Stat. 113. Ante, p. 580.

68A Stat. 203.

74^ltlt!'loor^' 26 USC 851*, ^^^-

Post,

p. 637.

[33 5^^^

"(1) IN GENERAL.—Except as provided in paragraph (2) R items of tax preference of an electing small business corporati (as defined in section 1371(b)) for each taxable year of the cori?'^ ration shall be treated as items of tax preference of the sharp holders of such corporation, and, except as provided in paragraph (2), shall not be treated as items of tax preference of such corpora tion. The sum of the items so treated shall be apportioned pro rata among such shareholders in a manner consistent with section I374 (c)(1). For purposes of this paragraph, this part shall be treated as applying to such corporation. " (2) CERTAIN CAPITAL GAINS.—If for a taxable year of an electing small business corporation a tax is imposed on the income of such corporation under section 1378, such corporation shall notwithstanding the provisions of section 1371(b)(1), be subject to f]r^Q. ^^x imposed by section 56, but computed only with reference to the item of tax preference set forth in section 57(a)(9)(B) to the extent attributable to gains subject to the tax imposed by '• section 1378. "(e) PARTICIPANTS I N A COMMON TRUST FUND.—The items of tax preference of a common trust fund (as defined in section 584(a)) for each taxable year of the fund shall be treated as items of tax preference of the participants of such fund and shall be apportioned pro rata among such participants. For purposes of this subsection, this part shall be treated as applying to such fund. "(f) REGULATED INVESTMENT COMPANIES, E T C. — I n the case of a regulated investment company to which part I of subchapter M applies or a real estate investment trust to which part II of subchapter M applies— "(1) the item of tax preference set forth in section 57(a)(9) shall not be treated as an item of tax preference of such company or such trust for each taxable year to the extent that such item is attributable to amounts taken into account as income by the shareholders of such company under section 852(b)(3), or by the shareholders or holders of beneficial interests of such trust under section 857(b)(3), and " (2) the items of tax preference of such company or such trust for each taxable year (other than the item of tax preference set forth in section 57(a)(9) and, in the case of a real estate investment trust, the item of tax preference set forth in section 57(a) (2)) shall be treated as items of tax preference of the shareholders of such company, or the shareholders or holders of beneficial interests of such trust (and not as items of tax preference of such company or such t r u s t), in the same proportion that the dividends (other than capital gain dividends) paid to each such shareholder, or holder of beneficial interest, bears to the taxable income of such company or such trust determined without regard to the deduction for dividends paid. ,i "(g)

( ,t •

TAX PREFERENCES ATTRIBUTABLE TO FOREIGN SOURCES.—

" (1) IN GENERAL.—For purposes of section 56, the items of tax preference set forth in section 57(a) (other than in paragraphs (6) and (9) of such section) which are attributable to sources within any foreign country or possession of the United States shall be taken into account only to the extent that such items reduce the tax imposed by this chapter (other than the tax imposed by section 56) on income derived from sources withm the United States. For purposes of the preceding sentence, items of tax preference shall be treated as reducing the tax imposed by this chapter before items which are not items of tax preference.

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