Page:United States Statutes at Large Volume 103 Part 3.djvu/289

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PUBLIC LAW 101-239—DEC. 19, 1989 103 STAT. 2357 ., company) with respect to the stock for which such distribu- tion is made, "(B) the determination of the person required to include such distribution in gross income shall be made under the principles of section 551(f), and "(C) any person required to include such distribution in gross or distributable net income shall include such dis- tribution in income for such person's taxable year in which the taxable year of the foreign personal holding company ends." (2) CONFORMING AMENDMENT.— Subsection (d) of section 563 (as redesignated by paragraph (1)) is amended by striking "subsection (a) or (b)" and inserting "subsection (a), (b), or (c)'. (c) CLERICAL AMENDMENT.—The table of sections for subpart D of part II of subchapter N of chapter 1 is amended by adding at the end thereof the following new item: "Sec. 898. Taxable year of certain foreign corporations." (d) EFFECTIVE DATE. — 26 USC 898 note. (1) IN GENERAL.—The amendments made by this section shall apply to taxable years of foreign corporations beginning after July 10, 1989. (2) SPECIAL RULES. — If any foreign corporation is required by the amendments made by this section to change its taxable year for its first taxable year beginning after July 10, 1989— (A) such change shall be treated as initiated by the taxpayer, (B) such change shall be treated as having been made with the consent of the Secretary of the Treasury or his •I delegate, and (C) if, by reason of such change, any United States person is required to include in gross income for 1 taxable year amounts attributable to 2 taxable years of such foreign corporation, the amount which would otherwise be required to be included in gross income for such 1 taxable year by reason of the short taxable year of the foreign corporation resulting from such change shall be included in gross income ratably over the 4-taxable-year period beginning with such 1 taxable year. SEC. 7402. LIMITATION ON USE OF DECONSOLIDATION TO AVOID FOR- EIGN TAX CREDIT LIMITATIONS. (a) GENERAL RULE.— Section 904 (relating to limitations on foreign tax credit) is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection: "(i) LIMITATION ON USE OF DECONSOUDATION To AVOID FOREIGN TAX CREDIT LIMITATIONS. — If 2 or more domestic corporations would v be members of the same affiliated group if— ^ "(1) section 1504(b) were applied without regard to the excep- tions contained therein, and "(2) the constructive ownership rules of section 1563(e) ap- plied for purposes of section 1504(a), the Secretary may by regulations provide for resourcing the income of any of such corporations or for modifications to the consolidated return regulations to the extent that such resourcing or modifica- tions are necessary to prevent the avoidance of the provisions of this subpart."