Page:United States Statutes at Large Volume 96 Part 1.djvu/494

 96 STAT. 452

PUBLIC LAW 97-248—SEPT. 3, 1982 gas of the related group which includes such corporation equaled or exceeded 1,000 barrels. "(C) RELATED GROUP.—The term 'related group' means a group consisting of the foreign corporation and any other person who is a related person with respect to such corporation. "(D) AVERAGE DAILY PRODUCTION OF FOREIGN CRUDE OIL AND NATURAL GAS.—For purposes of this paragraph, the

average daily production of foreign crude oil or natural gas of any related group for any taxable year (and the conversion of cubic feet of natural gas into barrels) shall be determined under rules similar to the rules of section 613A except that only crude oil or natural gas from a well located outside the United States shall be taken into account." (d) EXCEPTION FROM FOREIGN BASE COMPANY INCOME FOR CERTAIN

FOREIGN CORPORATIONS NOT TO APPLY.—Paragraph (4) of section

26 USC 954.

954(b) is amended by adding at the end thereof the following new sentence: "The preceding sentence shall not apply to foreign base company oil related income described in subsection (a)(5)." (e) CONFORMING AMENDMENTS.—Subsection (a) of section 954 is

amended by striking out "and" at the end of paragraph (3), and by striking out the period at the end of paragraph (4) and inserting in lieu thereof, and". 26 USC 954 note. (f) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 1982, and to taxable years of United States shareholders in which, or with which, such taxable years of foreign corporations end. SEC. 213. POSSESSION TAX CREDIT; INCOME TAX LIABILITY INCURRED TO THE VIRGIN ISLANDS. (a) POSSESSION TAX CREDIT.— (1) ACTIVE TRADE OR BUSINESS REQUIREMENT.—Paragraph (2) of

26 USC 936.

section 936(a) (relating to conditions which must be satisfied) is amended— (A) by striking out "50 percent" in subparagraph (B) and inserting in lieu thereof "65 percent", and (B) by adding at the end thereof the following new subparagraph: "(C) TRANSITIONAL RULE.—In applying subparagraph (B)

with respect to taxable years beginning after December 31, 1982, and before January 1, 1985, the following percentage shall be substituted for "65 percent": "For taxable years beginning in calendar year: 1983 1984

The percentage tax is: 55 60".

(2) INCOME ATTRIBUTABLE TO CERTAIN INTANGIBLE PROPERTY.—

Section 936 (relating to Puerto Rico and possession tax credit) is amended by adding at the end thereof the following new subsection: "(h) TAX TREATMENT OF INTANGIBLE PROPERTY INCOME.— "(1) IN GENERAL.— "(A) INCOME ATTRIBUTABLE TO SHAREHOLDERS.—The intan-

gible property income of a corporation electing the application of this section for any taxable year shall be included on a pro rata basis in the gross income of all shareholders of

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