118 STAT. 1512 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(ii) the activity is performed in the home country of the related person, and ‘‘(iii) the related person is compensated on an arm’s length basis for the performance of the activity by its employees and such compensation is treated as earned by such person in its home country for purposes of the home country’s tax laws.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to taxable years of such foreign corporations beginning after December 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of such foreign corporations end. SEC. 417. 10 YEAR FOREIGN TAX CREDIT CARRYOVER; 1 YEAR FOREIGN TAX CREDIT CARRYBACK. (a) GENERAL RULE.—Section 904(c) (relating to carryback and carryover of excess tax paid) is amended— (1) by striking ‘‘in the second preceding taxable year,’’, and (2) by striking ‘‘, and in the first, second, third, fourth, or fifth’’ and inserting ‘‘and in any of the first 10’’. (b) EXCESS EXTRACTION TAXES.—Paragraph (1) of section 907(f) is amended— (1) by striking ‘‘in the second preceding taxable year,’’, (2) by striking ‘‘, and in the first, second, third, fourth, or fifth’’ and inserting ‘‘and in any of the first 10’’, and (3) by striking the last sentence. (c) EFFECTIVE DATE.— (1) CARRYBACK.—The amendments made by subsections (a)(1) and (b)(1) shall apply to excess foreign taxes arising in taxable years beginning after the date of the enactment of this Act. (2) CARRYOVER.—The amendments made by subsections (a)(2) and (b)(2) shall apply to excess foreign taxes which (with out regard to the amendments made by this section) may be carried to any taxable year ending after the date of the enact ment of this Act. SEC. 418. MODIFICATION OF THE TREATMENT OF CERTAIN REIT DIS TRIBUTIONS ATTRIBUTABLE TO GAIN FROM SALES OR EXCHANGES OF UNITED STATES REAL PROPERTY INTERESTS. (a) IN GENERAL.—Paragraph (1) of section 897(h) (relating to look through of distributions) is amended by adding at the end the following new sentence: ‘‘Notwithstanding the preceding sen tence, any distribution by a REIT with respect to any class of stock which is regularly traded on an established securities market located in the United States shall not be treated as gain recognized from the sale or exchange of a United States real property interest if the shareholder did not own more than 5 percent of such class of stock at any time during the taxable year.’’. (b) CONFORMING AMENDMENT.—Paragraph (3) of section 857(b) (relating to capital gains) is amended by adding at the end the following new subparagraph: ‘‘(F) CERTAIN DISTRIBUTIONS.—In the case of a share holder of a real estate investment trust to whom section 897 does not apply by reason of the second sentence of section 897(h)(1), the amount which would be included 26 USC 904 note. 26 USC 954 note.
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