Page:United States Statutes at Large Volume 98 Part 1.djvu/710

 98 STAT. 662

PUBLIC LAW 98-369—JULY 18, 1984 PART III—TAXATION OF CERTAIN TRANSFERS OF PROPERTY OUTSIDE THE UNITED STATES SEC. 131. TAXATION OF CERTAIN TRANSFERS OF PROPERTY OUTSIDE THE UNITED STATES.

26 USC 367.

(a) IN GENERAL.—Subsection (a) of section 367 (relating to transfers of property from the United States) is amended to read as follows: "(a) TRANSFERS OF PROPERTY FROM THE UNITED STATES.— "(1) GENERAL RULE.—If, in connection with any exchange

described in section 332, 351, 354, 355, 356, or 361, a United States person transfers property to a foreign corporation, such foreign corporation shall not, for purposes of determining the extent to which gain shall be recognized on such transfer, be considered to be a corporation. "(2) EXCEPTION FOR CERTAIN STOCK OR SECURITIES.—Except to

the extent provided in regulations, paragraph (1) shall not apply to the transfer of stock or securities of a foreign corporation which is a party to the exchange or a party to the reorganization. "(3) EXCEPTION FOR TRANSFERS OF CERTAIN PROPERTY USED IN THE ACTIVE CONDUCT OF A TRADE OR BUSINESS.—

"(A) IN GENERAL.—Except as provided in regulations prescribed by the Secretary, paragraph (1) shall not apply to any property transferred to a foreign corporation for use by such foreign corporation in the active conduct of a trade or business outside of the United States. "(B) PARAGRAPH NOT TO APPLY TO CERTAIN PROPERTY.—

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Except as provided in regulations prescribed by the Secretary, subparagraph (A) shall not apply to any— "(i) property described in paragraph (1) or (3) of section 1221 (relating to inventory and copyrights, etc.), "(ii) installment obligations, accounts receivable, or similar property, "(iii) foreign currency or other property denominated in foreign currency, "(iv) intangible property (within the meaning of section 936(h)(3)(B)), or "(v) property with respect to which the transferor is a lessor at the time of the transfer, except that this clause shall not apply if the transferee was the lessee. "(C) TRANSFER OF FOREIGN BRANCH WITH PREVIOUSLY DEDUCTED LOSSES.—Except as provided in regulations pre-

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scribed by the Secretary, subparagraph (A) shall not apply to gain realized on the transfer of the assets of a foreign branch of a United States person to a foreign corporation in an exchange described in paragraph (1) to the extent that— "(i) the sum of losses— "(I) which were incurred by the foreign branch before the transfer, and "(II) with respect to which a deduction was allowed to the taxpayer, exceeds "(ii) the sum of— "(I) any taxable income of such branch for a taxable year after the taxable year in which the

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