Page:United States Statutes at Large Volume 96 Part 1.djvu/495

 PUBLIC LAW 97-248—SEPT. 3, 1982 such electing corporation at the close of the taxable year of such electing corporation as income from sources within the United States for the taxable year of such shareholder in which or with which the taxable year of such electing corporation ends. "(B) EXCLUSION FROM THE INCOME OF AN ELECTING CORPO-

RATION.—Any intangible property income of a corporation electing the application of this section which is included in the gross income of a shareholder of such corporation by reason of subparagraph (A) shall be excluded from the gross income of such corporation. "(2) FOREIGN SHAREHOLDERS; SHAREHOLDERS NOT SUBJECT TO TAX.—

"(A) IN GENERAL.—Paragraph (1)(A) shall not apply with respect to any shareholder— "(i) who is not a United States person, or "(ii) who is not subject to tax under this title on intangible property income which would be allocated to such shareholder (but for this subparagraph). "(B) TREATMENT OF NONALLOCATED INTANGIBLE PROPERTY

INCOME.—For purposes of this subtitle, intangible property income of a corporation electing the application of this section which is not included in the gross income of a shareholder of such corporation by reason of subparagraph (A)"(i) shall be treated as income from sources within the United States, and "(ii) shall not be taken into account under subsection (a)(2). "(3) INTANGIBLE PROPERTY INCOME.—For purposes of this subsection— "(A) IN GENERAL.—The term 'intangible property income' means the gross income of a corporation attributable to any intangible property other than intangible property which has been licensed to such corporation since prior to 1948 and is in use by such corporation on the date of the enactment of this subparagraph. "(B) INTANGIBLE PROPERTY.—The term 'intangible property' means any— "(i) patent, invention, formula, process, design, pattern, or know-how; "(ii) copyright, literary, musical, or artistic composition; "(iii) trademark, trade name, or brand name; "(iv) franchise, license, or contract; "(v) method, program, system, procedure, campaign, survey, study, forecast, estimate, customer list, or technical data; or "(vi) any similar item, which has substantial value independent of the services of any individual. "(C) EXCLUSION OF REASONABLE PROFIT.—The term 'intangible property income' shall not include any portion of the income from the sale, exchange or other disposition of any product, or from the rendering of services, by a corporation electing the application of this section which is determined by the Secretary to be a reasonable profit on the direct and

96 STAT. 453

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