Page:United States Statutes at Large Volume 98 Part 1.djvu/691

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 643

then paragraph (5) shall not apply to the proceeds from relending such obligations or related capital before January 1, 1986. SEC. 122. CERTAIN AMOUNTS TREATED AS INTEREST FOR PURPOSES OF THE LIMITATION ON THE FOREIGN TAX CREDIT.

(a) GENERAL RULE.—Subsection (d) of section 904 (relating to limitation on foreign tax credit) is amended by adding at the end thereof the following new paragraph:

26 USC 904.

"(3) CERTAIN AMOUNTS ATTRIBUTABLE TO UNITED STATES-OWNED FOREIGN CORPORATIONS, ETC., TREATED AS INTEREST.—

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"(A) IN GENERAL.—For purposes of this subsection, dividends and interest— "(i) paid or accrued by a designated payor corporation, and "(ii) attributable to any taxable year of such corporation, shall be treated as interest income described in paragraph (2) to the extent that the aggregate amount of such dividends and interest does not exceed the separate limitation interest of the designated payor corporation for such taxable year. "(B) SEPARATE LIMITATION INTEREST.—For purposes of this subsection, the term 'separate limitation interest' means, with respect to any taxable year— "(i) the aggregate amount of the interest income described in paragraph (2) (including amounts treated as so described by reason of this paragraph) which is received or accrued by the designated payor corporation during the taxable year, reduced by "(ii) the deductions properly allocable (under regulations prescribed by the Secretary) to such income. "(C) EXCEPTION WHERE DESIGNATED CORPORATION HAS SMALL A M O U N T OF SEPARATE LIMITATION INTEREST.—Sub-

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paragraph (A) shall not apply to any amount attributable to the taxable year of a designated payor corporation, if^ "(i) such corporation has earnings and profits for such taxable year, and "(ii) less than 10 percent of such earnings and profits is attributable to separate limitation interest. "(D) TREATMENT OF CERTAIN INTEREST.—For purposes of this paragraph, the amount of the separate limitation interest and the earnings and profits of any designated payor corporation shall be determined without any reduction for interest paid or accrued to a United States shareholder (as defined in section 951(b)) or a related person (within the meaning of section 267(b)) to such a shareholder. "(E) DESIGNATED PAYOR CORPORATION.—For purposes of

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this paragraph, the term 'designated payor corporation' means— "(i) any United States-owned foreign corporation (within the meaning of subsection (g)(6)), "(ii) any other foreign corporation in which a United States person is a United States shareholder (as defined in section 9510>)) at any time during the taxable year of such foreign corporation, and "(iii) any regulated investment company.

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