Page:United States Statutes at Large Volume 92 Part 3.djvu/283

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2915

"(6) RECAPTURE OF POSSESSION LOSSES DURING TRANSITIONAL PERIOD WHERE TAXPAYER IS ON A PER-COUNTRY BASIS.— "(A) APPLICATION OF PARAGRAPH.—This paragraph shall

apply if— "(i) the teixpayer sustained a loss in a possession of the United States in a taxable year beginning after December 31, 1975, and before January 1, 1979, « "(ii) such loss is attributable to a trade or business engaged in by the taxpayer in such possession on January 1, 1976, and "(iii) the taxpayer chooses to have the benefits of subpart A of part III of subchapter N apply for such taxable year and section 904(a)(1) of the Internal Revenue Code of 1954 (as in effect before the enactment of 26 USC 904. this Act) applies with respect to such taxable year. "(B) NO RECAPTURE DURING TRANSITION PERIOD.—In any

case to which this paragraph applies, for purposes of determining the liability for tax of the taxpayer for taxable years beginning before January 1, 1979, section 904(f) of the Internal Revenue Code of 1954 shall not apply with respect to the loss described in subparagraph (A)(i). "(C) RECAPTURE OF LOSS AFTER THE TRANSITION PERIOD.—In

any case to which this paragraph applies— "(i) for purposes of determining the liability for tax of the taxpayer for taxable years beginning after December 31, 1978, section 904(f) of the Internal Revenue Code of 1954 shall be applied with respect to the loss described in subparagraph (A)(i) under the principles of section 904(a)(1) of such Code (as in effect before the enactment of this Act);but "(ii) in the case of any taxpayer and any possession, the aggregate amount to which such section 904(f) applies by reason of clause (i) shall not exceed the sum of the net incomes of all affiliated corporations from such possession for taxable years of such affiliated corporations beginning after December 31, 1975, and before January 1, 1979. "(D) TAXPAYERS NOT ENGAGED IN TRADE ON BUSINESS ON

JANUARY 1, 1976.—In any case to which this paragraph applies but for the fact that the taxpayer was not engaged in a trade or business in such possession on January 1, 1976, for purposes of determining the liability for tax of the taxpayer for taxable years beginning before January 1, 1979; if section 904(a)(1) of such Code (as in effect before the enactment of this Act) applies with respect to such taxable year, the provisions of section 904(f) of such Code shall be applied with respect to the loss described in subparagraph (A)(i) under the principles of such section 904(a)(1). "(E) AFFILIATED CORPORATION DEFINED.—For purposes of

subparagraph (C)(ii), the term 'affiliated corporation' means a corporation which, for the taxable year for which the net income is being determined, was not a member of the same affiliated group (within the meaning of section 1504 of the Internal Revenue Code of 1954) as the taxpayer but would 26 USC 1504. have been a member of such group but for the application of subsection (b) of such section 1504."

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