Page:United States Statutes at Large Volume 98 Part 1.djvu/688

 98 STAT. 640

PUBLIC LAW 98-369—JULY 18, 1984 For purposes of the preceding sentence, earnings and profits shall be determined without any reduction for interest described in paragraph (3) (determined without regard to subparagraph (C) thereof). "(6) UNITED STATES-OWNED FOREIGN CORPORATION.—For purposes of this subsection, the term 'United States-owned foreign corporation' means any foreign corporation if 50 percent or more of— "(A) the total combined voting power of all classes of stock of such corporation entitled to vote, or "(B) the total value of the stock of such corporation, is held directly (or indirectly through applying paragraphs (2) and (3) of section 958(a) and paragraph (4) of section 318(a)) by United States persons (as defined in section 7701(a)(30)). "(7) DIVIDEND.—For purposes of this subsection, the term 'dividend' includes any gain treated as ordinary income under section 1246 or as a dividend under section 1248. "(8) COORDINATION WITH SUBSECTION (f).—This subsection shall be applied before subsection (D. "(9) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary or appropriate for purposes of this subsection, including— "(A) regulations for the application of this subsection in the case of interest or dividend payments through 1 or more entities, and "(B) regulations providing that this subsection shall apply to interest paid or accrued to any person (whether or not a United States shareholder)."

26 USC 904 note.

Ante, p. 638.

(b) EFFECTIVE D A T E. —

(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendment made by subsection (a) shall take effect on the date of the enactment of this Act. In the case of any tsixable year of any United States-owned foreign corporation ending after the date of the enactment of this Act— (A) only income received or accrued by such foreign corporation after such date of enactment shall be taken into account under section 904(g) of the Internal Revenue Code of 1954 (as added by subsection (a)); except that (B) paragraph (5) of such section 904(g) (relating to exception where small amount of United States source income) shall be applied by taking into account all income received or accrued by such foreign corporation during such taxable year. (2) SPECIAL RULE FOR APPLICABLE CFC.—

(A) IN GENERAL.—In the case of qualified interest received or accrued by an applicable CFC before January 1, 1992— (i) such interest shall not be taken into account under section 904(g) of the Internal Revenue Code of 1954 (as added by subsection (a)), except that (ii) such interest shall be taken into account for purposes of applying paragraph (5) of such section •^i-.i.,.- > 904(g) (relating to exception where small amount of United States source income). (B) QUALIFIED INTEREST.—For purposes of subparagraph 8Brs (A), the term "qualified interest" means— Bi Biil^..J. (i) the aggregate amount of interest received or accrued during any taxable year by an applicable CFC on

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