Page:United States Statutes at Large Volume 98 Part 1.djvu/560

 98 STAT. 512

PUBLIC LAW 98-369—JULY 18, 1984 "(D)

EXCEPTION WHERE PROPERTY USED IN UNRELATED

TRADE OR BUSINESS.—The term 'tax-exempt use property' shall not include any portion of a property if such portion is predominantly used by the tax-exempt entity (directly or through a partnership of which such entity is a partner) in an unrelated trade or business the income of which is subject to tax under section 511. "(4) TAX-EXEMPT ENTITY.—

"(A) IN GENERAL.—For purposes of this subsection, the term 'tax-exempt entity' means— "(i) the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, "(ii) an organization (other than a cooperative described in section 521) which is exempt from tax imposed by this chapter, and "(iii) any foreign person or entity. "(B) EXCEPTIONS FOR CERTAIN PROPERTY USED BY FOREIGN PERSON OR ENTITY.— "(i) INCOME FROM PROPERTY SUBJECT TO UNITED STATES

TAX.—Clause (iii) of subparagraph (A) shall not apply with respect to any property if more than 50 percent of the gross income for the taxable year derived by the foreign person or entity from the use of such property is— "(I) subject to tax under this chapter, or "(II) included under section 951 in the gross income of a United States shareholder for the taxable year with or within which ends the taxable year of the controlled foreign corporation in which such income was derived. For purposes of the preceding sentence, any exclusion or exemption shall not apply for purposes of determining the amount of the gross income so derived, but shall apply for purposes of determining the portion of such gross income subject to tax under this chapter. "(ii) MOVIES AND SOUND RECORDINGS.—Clause (iii) of

Post, p. 635.

Corporations. Post, p. 635.

subparagraph (A) shall not apply with respect to any qualified film (as defined in section 48(k)(l)(B)) or any sound recording (as defined in section 48(r)). "(C) FOREIGN PERSON OR ENTITY.—For purposes of this paragraph, the term 'foreign person or entity' means— "(i) any foreign government, any international organization, or any agency or instrumentality of any of the foregoing, and "(ii) any person who is not a United States person. Such term does not include any foreign partnership or other foreign pass-thru entity. "(D) TREATMENT OF CERTAIN TAXABLE INSTRUMENTALITIES.—For purposes of this subsection and paragraph (5) of section 48(a), a corporation shall not be treated as an instrumentality of the United States or of any State or political subdivision thereof if— "(i) all of the activities of such corporation are subject to tax under this chapter, and

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