Page:United States Statutes at Large Volume 85.djvu/579

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

"SEC. 997. SPECIAL SUBCHAPTER C RULES. "For purposes of applying the provisions of subchapter C of chapter 1, any distribution in property to a corporation by a D I S C or former D I S C which is made out of previously taxed income or accumulated D I S C income shall— " (1) be treated as a distribution in the same amount as if such distribution of property were made to an individual, and "(2) have a basis, in the hands of the recipient corporation, equal to the amount determined under paragraph (1)." SEC. 502. DEDUCTIONS, CREDITS, ETC. (a) DivnjENDS RECEIVED DEDUCTION.—Section 246 (relating to rules applying to deductions for dividends received) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following: " (d) DIVIDENDS FROM A D I S C OR FORMER DISC.—No deduction shall be allowed under section 243 in respect of a dividend from a corporation which is a D I S C or former D I S C (as defined in section 992(a)) to the extent such dividend is paid out of the corporation's accumulated D I S C income or previously taxed income, or is a deemed distribution pursuant to section 995(b)(1). " (b) FOREIGN TAX CREDIT.—

(1) Section 901(d) (relating to corporations treated as foreign corporations) is amended by adding at the end thereof the following: "For purposes of this subpart, dividends from a D I S C or former D I S C (as defined in section 992(a)) shall be treated as dividends from a foreign corporation to the extent such dividends are treated under part I as income from sources without the United States." (2) The heading of section 904(f) and paragraph (1) of section 904(f) (relating to limitation on foreign tax credit) are amended to read as follows: " (f) APPLICATION or SECTION I N CASE or CERTAIN INTEREST INCOME AND DIVIDENDS FROM A D I S C OR FORMER DISC.—

"(1) IN GENERAL.—The provisions of subsections (a), (c), (d), and (e) of this section shall be applied separately with respect to each of the following items of income— " (A) the interest income described in paragraph (2), " (B) dividends from a D I S C or former D I S C (as defined in section 992(a)) to the extent such dividends are treated as income from sources without the United States, and " (C) income other than the interest income described in paragraph (2) and dividends described in subparagraph (B)." (3) Section 904(f)(3) (relating to limitation on foreign tax credit) is amended to read as follows: "(3) OVERALL LIMITATION NOT TO APPLY.—The limitation provided by subsection (a)(2) shall not apply with respect to the interest income described in paragraph (2) or to dividends described in paragraph (1)(B). The Secretary or his delegate shall by regulations prescribe the manner of application of subsection (e) with respect to cases in which the limitation provided by subsection (a)(2) applies with respect to income described in paragraph (1)(B) and (C). " (4) Section 904(f) is amended by adding at the end thereof the following new paragraph: " (5) D I S C DIVIDENDS AGGREGATED FOR PURPOSES OF PER-COUNTRY LIMITATION.—In the case of a taxpayer who for the taxable year has dividends described in paragraph (1)(B) from more than

549

68A Stat. 8 4. 26 USC 3 0 1.

68A Stat. 74; 83 Stat. 6 2 5.

Ante, p. 535. Ante, p. 544. 68A Stat. 285; 80 Stat. 1569.

76 Stat. 1002.

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