Page:United States Statutes at Large Volume 90 Part 2.djvu/157

 PUBLIC LAW 94-455—OCT. 4, 1976 '

from sources without the United States in the taxable year of the disposition, by reason of such disposition, in an amount equal to the lesser of the excess of the fair market value of such property over the taxpayer's adjusted basis in such property or the remaining amount of the overall foreign losses which were not used under paragraph (1) for such taxable year or any prior taxable year, and " ( i i) paragraph (1) shall be applied with respect to such income by substituting '100 percent' for '50 percent'. I n determining for purposes of this subparagraph whether the predominant use of any property has been without the United States, there shall be taken into account use during the 3-year period ending on the date of the disposition (or, if shorter, the period during which the property has been used in the trade or business). "(B)

90 STAT. 1625

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DISPOSITION DEFINED AND SPECIAL RULES.—

" (i) For purposes of this subsection, the term 'disposition' includes a sale, exchange, distribution, or gift of property whether or not gain or loss is recognized on the transfer. " ( i i) Any taxable income recognized solely by reason of subparagraph (A) shall have the same characterization it would have h a d if the taxpayer h a d sold or exchanged the property. " ( i i i) The Secretary shall prescribe such regula- Regulations, tions as he may deem necessary to provide for adjustments to the basis of property to reflect taxable income recognized solely by reason of subparagraph (A). " (C) EXCEPTIONS.—Xotwithstanding subparagraph (B), the term 'disposition' does not include— " (i) a disposition of property which is not a material factor in the realization of income by the taxpayer, o r " ( i i) a disposition of property to a domestic corporation in a distribution or transfer described in section 381(a). 26 USC 381. " (4) DETERMINATION OF FOREIGN OIL RELATED LOSS WHERE SECTION

907 APPLIES.—In the case of a corporation to which section 907 (b)(1) applies, the foreign oil related loss shall be the amount by Post, p. 1630. which the gross income for the taxable year from sources without the United States and its possessions (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) taken into account in determining the foreign oil related income for such year is exceeded by the sum of the deductions properly apportioned or allocated thereto, except that there shall not be taken into account— " (A) any net operating loss deduction allowable for such year under section 172(a) or any capital loss carrybacks and carryovers to such year under section 1212, and "(B) any " (i) foreign expropriation loss for such year, as defined in section 172(k)(1), or " ( i i) loss for such year which arises from fire, storm, shipwreck, or other casualty, or from theft, to the extent such loss is not compensated for by insurance or otherwise.".

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