Page:United States Statutes at Large Volume 90 Part 2.djvu/162

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1630

"Gain from the sale or exchange of capital assets." 26 USC 904 note. Ante, p. 1620.

period ending with the close of such second corporation's taxable year immediately preceding the year during which the sale or exchange occurred, or " ( i i i) in the case of any taxpayer, is personal property (other than stock in a corporation) sold or exchanged other than in a country (or possession) in which such property is used in a trade or business of the taxpayer or in which such taxpayer derived more than 50 percent of its gross income for the 3-year period ending with the close of its taxable year immediately preceding the year during which the sale or exchange occurred, unless such gain is subject to an income, war profits, or excess profits tax of a foreign country or possession of the United States, and the rate of tax applicable to such gain is 10 percent or more of the gain from the sale or exchange (computed under this chapter). " (D) SECTION I 2 3 I GAINS.—The term 'gain from the sale or exchange of capital assets' includes any gain so treated under section 1231." (b) EFFECTIVE DATES.—The amendment made by this section shall apply to taxable years beginning after December 31, 1975, except that the provisions of section 904(b)(3)(C) shall only apply to sales or exchanges made after November 12, 1975. SEC. 1035. FOREIGN OIL AND GAS EXTRACTION INCOME. (a) REDUCTION I N L I M I T A T I O N ON FOREIGN T A X CREDITS ALLOWABLE

26 USC 907.

FOR O I L AND GAS EXTRACTION INCOME.—Subsection (a) of section 907

(relating to reduction in amounts allowable as foreign tax under section 901) is amended to read as follows: "(a)

REDUCTION I N A M O U N T ALLOWED AS FOREIGN T A X UNDER S E C -

TION 901.—In a p p l y i n g section 901, the amount of any oil and gas extraction taxes paid or accrued (or deemed to have been paid) during the taxable year which would (but for this subsection) be taken into account for purposes of section 901 shall be reduced by the amount (if any) by which the amount of such taxes exceeds the product of— " (1) the amount of the foreign oil and gas extraction income for the taxable year, multiplied by " (2) the percentage which is the sum of the normal tax rate and the surtax rate for the taxable year specified in section 1 1. " (b)

FOREIGN

O I L RELATED

INCOME

EARNED BY

INDIVIDUALS.—

Subsection (b) of section 907 (relating to special rules in case of foreign oil and gas income) is amended to read as follows: " (b) APPLICATION OF SECTION 904 L I M I T A T I O N. —

Ante, p. 1620.

" (1) CORPORATIONS.—In the case of a corporation, the provisions of section 904 shall be applied separately with respect to— " (A) foreign oil related income, and " (B) other taxable income. " (2) OTHER TAXPAYERS.—In the case of a taxpayer other than a corporation, the provisions of subsection (a) shall not apply and the provisions of section 904 shall be applied separately with respect to— " (A) foreign oil and gas extraction income, and " (B) other taxable income (including other foreign oil related income). I n the case of a corporation, with respect to foreign oil-related income, and in the case of a taxpayer other than a corporation, with respect to foreign oil and gas extraction income, the overall limitation provided

�