Page:United States Statutes at Large Volume 98 Part 1.djvu/711

 PUBLIC LAW 98-369—JULY 18, 1984

98 STAT. 663

loss was incurred and through the close of the taxable year of the transfer, and "(11) the amount which is recognized under section 904(f)(3) on account of the transfer. Any gain recognized by reason of the preceding sentence shall be treated for purposes of this chapter as income from sources outside the United States having the same character as such losses had. "(4) SPECIAL RULE FOR TRANSFER OF PARTNERSHIP INTERESTS.—

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Except as provided in regulations prescribed by the Secretary, a transfer by a United States person of an interest in a partnership to a foreign corporation in an exchange described in paragraph (1) shall, for purposes of this subsection, be treated as a transfer to such corporation of such person's pro rata share of the assets of the partnership. "(5) SECRETARY MAY EXEMPT CERTAIN TRANSACTIONS FROM AP-

pucATiON OF THIS SUBSECTION.—Paragraph (1) shall not apply to the transfer of any property which the Secretary, in order to carry out the purposes of this subsection, designates by regulation." (b) SPECIAL RULES FOR TRANSFERS OF INTANGIBLES.—Subsection (d)

of section 367 (relating to special rule for transfer of intangibles by possession corporations) is amended to read as follows:

26 USC 367.

"(d) SPECIAL RULES RELATING TO TRANSFERS OF INTANGIBLES.—

"(1) IN GENERAL.—Except as provided in regulations prescribed by the Secretary, if a United States person transfers any intangible property (within the meaning of section 936(h)(3)(B)) to a foreign corporation in an exchange described in section 351 or 361— "(A) subsection (a) shall not apply to the transfer of such property, and "(B) the provisions of this subsection shall apply to such transfer. "(2) TRANSFER OF INTANGIBLES TREATED AS TRANSFER PURSUANT TO SALE OF CONTINGENT PAYMENTS.—

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"(A) IN GENERAL.—If paragraph (1) applies to any transfer, the United States person transferring such property shall be treated as— "(i) having sold such property in exchange for payments which are contingent upon the productivity, use, or disposition of such property, and "(ii) receiving amounts which reasonably reflect the amounts which would have been received— "(I) annually in the form of such payments over the useful life of such property, or "(II) in the case of a disposition following such transfer (whether direct or indirect), at the time of the disposition. "(B) EFFECT ON EARNINGS AND PROFITS.—For purposes of

.his chapter, the earnings and profits of a foreign corporation to which the intangible property was transferred shall be reduced by the amount required to be included in the income of the transferor of the intangible property under subparagraph (A)(ii). "(C) AMOUNTS RECEIVED TREATED AS UNITED STATES SOURCE ORDINARY INCOME.—For purposes of this chapter, any

amount included in gross income by reason of this subsec-



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