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PUBLIC LAW 91-684-JAN. 12, 1971

72 Stat. 1651. 26 USC 1372.

[84

STAT.

for any year beginning before the date of the enactment of this Act as a result of— (1) such corporation filing its income tax return on a form 1120 (instead of a form 1120S), or (2) a new shareholder not consenting to such election of such corporation in accordance with the requirements of subsection (e)(1) of such section 1372. Approved January 12, 1971.

Public Law 91-684 January 12, 1971

-^N ACT

[H. R. 18549]

To anieiKl sections 902(b) and 902(e) of the Internal Revenue Code of 1954 to rednc-e the oO-percent requirement to 10 percent between first and second levels and to include third-level foreign corporations in the tax credit stnicture if the 10-percent test is met.

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r oreign corpora"

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That section 902(b) « i

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tions, foreign tax ot the Internal Revenue Code of 1954 is amended to read as follows: "%i^^^,„„„ "(b) FOREIGN SUBSIDIARY OF FIRST AND SECOND FOREIGN CORPORA70 Stat. 1000, 26 USC 902.

^ ' TION.

(hereinafter in this subsection referred to as the 'first foreign corporation") owns 10 percent or more of the voting stock of a second foreign corporation from which it receives dividends in any taxable year, it shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid or deemed to be paid by such second foreign corporation to any foreign country or to any possession of the United States on or with respect to the accumulated profits of the corporation from which such dividends were paid which— " (A) for purposes of applying subsection (a)(1), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(A)) of such second foreign corporation from which such dividends were paid in excess of such income, war profits, and excess profits taxes, or " (B) for purposes of applying subsection (a)(2), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(B)) of such second foreign corporation from which such dividends were paid. "(2) If such first foreign corporation owns 10 percent or more of the voting stock of a second foreign corporation which, in turn, owns 10 percent or more of the voting stock of a third foreign corporation from which the second foreign corporation receives dividends in any taxable year, the second foreign corporation shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid by such third foreign corporation to any foreign country or to any possession of the United States on or with respect to the accumulated profits of the corporation from which such dividends were paid which— " (A) for purposes of applying subsection (a)(1), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(A)) of such third foreign corporation from which such dividends were paid in excess of such income, war profits, and excess profits taxes, or
 * '(1) If the foreign corporation described in subsection (a)

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