118 STAT. 1490 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(B) FINANCIAL CORPORATION.—For purposes of this paragraph, the term ‘financial corporation’ means any cor poration if at least 80 percent of its gross income is income described in section 904(d)(2)(D)(ii) and the regulations thereunder which is derived from transactions with persons who are not related (within the meaning of section 267(b) or 707(b)(1)) to the corporation. For purposes of the pre ceding sentence, there shall be disregarded any item of income or gain from a transaction or series of transactions a principal purpose of which is the qualification of any corporation as a financial corporation. ‘‘(C) ANTI ABUSE RULES.—In the case of a corporation which is a member of an electing financial institution group, to the extent that such corporation— ‘‘(i) distributes dividends or makes other distribu tions with respect to its stock after the date of the enactment of this paragraph to any member of the pre election worldwide affiliated group (other than to a member of the electing financial institution group) in excess of the greater of— ‘‘(I) its average annual dividend (expressed as a percentage of current earnings and profits) during the 5 taxable year period ending with the taxable year preceding the taxable year, or ‘‘(II) 25 percent of its average annual earnings and profits for such 5 taxable year period, or ‘‘(ii) deals with any person in any manner not clearly reflecting the income of the corporation (as determined under principles similar to the principles of section 482), an amount of indebtedness of the electing financial institu tion group equal to the excess distribution or the under statement or overstatement of income, as the case may be, shall be recharacterized (for the taxable year and subse quent taxable years) for purposes of this paragraph as indebtedness of the worldwide affiliated group (excluding the electing financial institution group). If a corporation has not been in existence for 5 taxable years, this subpara graph shall be applied with respect to the period it was in existence. ‘‘(D) ELECTION.—An election under this paragraph with respect to any financial institution group may be made only by the common parent of the pre election worldwide affiliated group and may be made only for the first taxable year beginning after December 31, 2008, in which such affiliated group includes 1 or more financial corporations. Such an election, once made, shall apply to all financial corporations which are members of the electing financial institution group for such taxable year and all subsequent years unless revoked with the consent of the Secretary. ‘‘(E) DEFINITIONS RELATING TO GROUPS.—For purposes of this paragraph— ‘‘(i) PRE ELECTION WORLDWIDE AFFILIATED GROUP.—The term ‘pre election worldwide affiliated group’ means, with respect to a corporation, the world wide affiliated group of which such corporation would Applicability.
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