Page:United States Statutes at Large Volume 96 Part 1.djvu/505

 PUBLIC LAW 97-248—SEPT. 3, 1982

96 STAT. 463

session within the meaning of subsection (d)(l)(A) of section 954, and further provided (except to the 26 USC 954. extent otherwise provided by regulations) the income derived by such foreign person on resale of such products (in the same state or in an altered state) is not included in foreign base company income for purposes of section 954(a). "(Ill) All members of an affiliated group must consent to an election under this subsection at such time and in such manner as shall be prescribed by the Secretary by regulations. "(6) TREATMENT OF CERTAIN SALES MADE AFTER JULY i, 1982.— "(A) IN GENERAL.—For purposes of this section, in the case of a disposition of intangible property made by a corporation after July 1, 1982, any gain or loss from such disposition shall be treated as gain or loss from sources within the United States to which paragraph (5) does not apply. (B) EXCEPTION.—Subparagraph (A) shall not apply to any disposition by a corporation of intangible property if such disposition is to a person who is not a related person to such corporation. "(C) PARAGRAPH DOES NOT AFFECT ELIGIBILTTY.—This paragraph shall not apply for purposes of determining whether the corporation meets the requirements of subsection (a)(2). "(7) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including rules for the application of this subsection to income from leasing of products to unrelated persons." (b) INCOME TAX LIABILITY INCURRED TO THE VIRGIN ISLANDS.—

Section 934 (relating to limitation on reduction in income tax liabil- 26 USC 934. ity incurred to the Virgin Islands) is amended— (1) by striking out "50 percent" in subsection (b)(2) and inserting in lieu thereof "65 percent", and (2) by adding at the end thereof the following new subsections: "(e) TAX TREATMENT OF INTANGIBLE PROPERTY INCOME OF CERTAIN DOMESTICORPORATIONS.— "(1) IN GENERAL.— "(A) INCOME ATTRIBUTABLE TO SHAREHOLDER.—The intan-

gible property income (within the meaning of section 936(h)(3)) for any taxable year of any domestic corporation Ante, p. 452. which is described in subsection (b) and which is an inhabitant of the Virgin Islands (within the meaning of section 28(a) of the Revised Organic Act of the Virgin Islands (48 U.S.C. 1642)), shall be included on a pro rata basis in the gross income of all shareholders of such corporation at the close of the taxable year of such 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 corporation ends. "(B) EXCLUSION FROM THE INCOME OF THE CORPORATION.—

Any intangible property income of a corporation described in subparagraph (A) 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.

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