Page:United States Statutes at Large Volume 98 Part 1.djvu/694

 98 STAT. 646

PUBLIC LAW 98-369—JULY 18, 1984 "(6) SPECIAL RULE FOR CERTAIN INCOME FROM LOANS OF A

CONTROLLED FOREIGN CORPORATION.—Any income of a controlled foreign corporation (within the meaning of section 957(a)) from a loan to a person for the purpose of financing— "(A) the purchase of property described in section 1221(1) of a related person, or "(B) the payment for the performance of services by a related person, shall be treated as interest described in paragraph (1). "(7) REGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to prevent the avoidance of the provisions of this subsection or section 956(b)(3)."

I • ")HU i Infra.

(h) TREATMENT AS UNITED STATES PROPERTY.—Subsection (b) of

26 USC 956.

section 956 (defining United States property) is amended by adding at the end thereof the following new paragraph: "(3) CERTAIN TRADE OR SERVICE RECEIVABLES ACQUIRED FROM RELATED UNITED STATES PERSONS.—

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Ante, p. 644. 26 USC 864 note.

26 USC. 863.

"(A) IN GENERAL.—Notwithstanding paragraph (2), the term 'United States property' includes any trade or service receivable if— "(i) such trade or service receivable is acquired (directly or indirectly) from a related person who is a United States person, and "(ii) the obligor under such receivable is a United States person. "(B) DEFINITIONS.—For purposes of this paragraph, the term 'trade or service receivable' and 'related person' have the respective meanings given to such terms by section 864(d)."

(c) EFFECTIVE D A T E. —

(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to accounts receivable and evidences of indebtedness transferred after March 1, 1984, in taxable years ending after such date. (2) TRANSITIONAL RULE.—The amendments made by this section shall not apply to accounts receivable and evidences of indebtedness acquired after March 1, 1984, and before March 1, 1994, by a Belgian corporation in existence on March 1, 1984, in any taxable year ending after such date, but only to the extent that the amount includible in gross income by reason of section 956 of the Internal Revenue Code of 1954 with respect to such corporation for all such taxable years is not reduced by reason of this paragraph by more than the lesser of— (A) $15,000,000 or (B) the amount of the Belgian corporation's adjusted basis on March 1, 1984, in stock of a foreign corporation formed to issue bonds outside the United States to the public. SEC. 124. TREATMENT OF CERTAIN TRANSPORTATION INCOME. (a) GENERAL RULE.—Section 863 (relating to items not specified in section 861 or 862) is amended by adding at the end thereof the following new subsection: "(c) SOURCE RULE FOR CERTAIN TRANSPORTATION INCOME.— "(1) TRANSPORTATION BEGINNING AND ENDING IN THE UNITED

STATES.—All transportation income attributable to transportation which begins and ends in the United States shall be treated as derived from sources within the United States.

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