Page:United States Statutes at Large Volume 110 Part 3.djvu/101

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PUBLIC LAW 104-188—AUG. 20, 1996 110 STAT. 1831 (1) IN GENERAL. —Subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section: "SEC. 30A. PUERTO RICAN ECONOMIC ACTIVITY CREDIT. "(a) ALLOWANCE OF CREDIT.— "(1) IN GENERAL.— Except as otherwise provided in this section, if the conditions of both paragraph (1) and paragraph (2) of subsection (b) are satisfied with respect to a qualified domestic corporation, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to the portion of the tax which is attributable to the taxable income, from sources without the United States, from— "(A) the active conduct of a trade or business within Puerto Rico, or "(B) the sale or exchange of substantially all of the assets used by the taxpayer in the active conduct of such trade or business. In the case of any taxable year beginning after December 31, 2001, the aggregate amount of taxable income taken into account under the preceding sentence (and in applying subsection (d)) shall not exceed the adjusted base period income of such corporation, as determined in the same manner as under section 936(j). "(2) QUALIFIED DOMESTICORPORATION. — For purposes of paragraph (1), the term 'qualified domestic corporation' means a domestic corporation— "(A) which is an existing credit claimant with respect to Puerto Rico, and "(B) with respect to which section 936(a)(4)(B) does not apply for the taxable year. "(3) SEPARATE APPLICATION.—For purposes of determining— "(A) whether a taxpayer is an existing credit claimant with respect to Puerto Rico, and "(B) the amount of the credit allowed under this section, this section (and so much of section 936 as relates to this section) shall be applied separately with respect to Puerto Rico. "(b) CONDITIONS WHICH MUST BE SATISFIED.— The conditions referred to in subsection (a) are— "(1) 3-YEAR PERIOD.— I f 80 percent or more of the gross income of the qualified domestic corporation for the 3-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession (determined without regard to section 904(f)). "(2) TRADE OR BUSINESS.—I f 75 percent or more of the gross income of the qualified domestic corporation for such period or such part thereof was derived from the active conduct of a trade or business within a possession. "(c) CREDIT NOT ALLOWED AGAINST CERTAIN TAXES.— The credit provided by subsection (a) shall not be allowed against the tax imposed by— "(1) section 59A (relating to environmental tax),