Page:United States Statutes at Large Volume 90 Part 2.djvu/153

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1621

which such credit is taken which the taxpayer's taxable income from sources without the United States (but not in excess of the taxpayer's entire taxable income) bears to his entire taxable income for the same taxable year. " (b) TAXABLE INCOME FOR PURPOSES OF COMPUTIXG LIMITATION.—•

For puri^oses of subsection (a), the taxable income in the case of a n individual, estate, or trust shall be computed without any deduction for personal exemptions under section 151 or 642(b). "(c)

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26 USC 151, 642.

amount by which all taxes paid or accrued to foreign countries or possessions of the United States for any taxable year for which the taxpayer chooses to have the benefits of this subpart exceed the limitation under subsection (a) shall be deemed taxes paid or accrued to foreign countries or possessions of the United States in the second preceding taxable year, i n the first preceding taxable year, and i n the first, second, t h i r d, fourth, or fifth succeeding taxable years, i n that order and to the extent not deemed taxes paid or accrued i n a p r i o r taxable year, in the amount by which the limitation under subsection (a) for such preceding or succeeding taxable year exceeds the sum of the taxes paid o r accrued to foreign countries or possessions of the United States for such preceding or succeeding taxable year and the amount of the taxes for any taxable year earlier than the current taxable year which shall be deemed to have been paid or accrued in such preceding or subsequent taxable year (whether o r not the taxpayer chooses to have the benefits of this subpart with respect to such earlier taxable year). Such amount deemed paid or accrued i n any year may be availed of only as a tax credit and not as a deduction and only if the taxpayer for such year chooses to have the benefits of this subpart as to taxes paid or accrued for that year to foreign countries or possessions of the United States. " (d) APPLICATION OP SECTION I N CASE OF CERTAIN INTEREST I N C O M E AND DIVIDENDS F R O M A D I S C OR FORMER D I S C. —

" (1) IN GENERAL.—The provisions of subsectious (a), (b), and (c) shall be applied separately with respect to each of the following items of income: " (A) the interest income described i n paragraph (2), " (B) dividends from a DIvSC or former D I S C (as defined in section 9 9 2 (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). " (2) INTEREST INCOME TO WHICH APPLICABLE.—For purposes of t h i s subsection, the interest income described in this paragraph is interest other than interest— " (A) derived from any transaction which is directly related to the active conduct by the taxpayer of a trade or business i n a foreign country or a possession of the United States, " (B) derived i n the conduct by the taxpayer of a banking, financing, or similar business, iii " (C) received from a corporation in which the taxpayer (or one or more includible corporations in an affiliated group, • as defined in section 1504, of which the taxpayer is a member) owns, directly or indirectly, at least 10 percent of the voting stock, or

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