PUBLIC LAW 95-600—NOV. 6, 1978
92 STAT. 2917
ing sentence shall be taken into account under paragraph (1) only with respect to Eimounts (A) paid or accrued to the foreign government before January 1, 1978, and (B) attributable to income earned before such date." (10) FOREIGN TAXES ATTRIBUTABLE TO SECTION 9 1 1 EXCLUSION.—
(A) IN GENERAL.—The last sentence of section 911(a) (relating to earned income from sources without the United States) is amended to read as follows: "An individual shall not be allowed as a deduction from his gross income any deductions (other than those allowed by section 151, relating to personal exemptions), to the extent that such deductions are properly allocable to or chargeable against amounts excluded from gross income under this subsection. For purposes of this title, the amount of the income, war profits, and excess profits taxes paid or accrued by any individual to a foreign country or possession of the United States for any taxable year shall be reduced by an amount determined by multiplying the amount of such taxes by a fraction— "(A) the numerator of which is the tax determined under subsection (d)(1)(B), and "(B) the denominator of which is the sum of the amount referred to in subparagraph (A), plus the limitation imposed for the taxable year by section 904(a).". (B) EFFECTIVE DATE.—The amendment made by subparagraph (A) shall apply to taxable years beginning after December 31, 1976.
26 USC 911.
26 USC 151.
26 USC 904. 26 USC 911 note.
(11) SALE OF ASSETS BY A POSSESSIONS CORPORATION.—
(A) IN GENERAL.—Subsection (a) of section 936 (relating to 26 USC 936. Puerto Rico and possession tax credit) is amended by redesignating paragraph (2) as paragraph (3) and by amending so much of paragraph (1) as precedes subparagraph (A) thereof to read as follows: "(1) IN GENERAL.—Except as provided in paragraph (3), if a domestic corporation elects the application of this section and if the conditions of both subparagraph (A) and subparagraph (B) of paragraph (2) are satisfied, 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 sum of— "(A) the taxable income, from sources without the United States, from— "(i) the active conduct of a trade or business within a possession of the United States, or "(ii) the sale or exchange of substantially all of the assets used by the taxpayer in the active conduct of such trade or business, and "(B) the qualified possession source investment income. "(2) CONDITIONS WHICH MUST BE SATISFIED.—The conditions referred to in paragraph (1) are:". (B) INCOME FROM SALE OF CARRYOVER BASIS PROPERTY NOT TAKEN INTO ACCOUNT.—
(i) Subsection (d) of section 936 (relating to definitions) is amended by adding at the end thereof the following new paragraph: "(3) CARRYOVER BASIS PROPERTY.—
"(A) IN GENERAL.—Income from the sale or exchange of any asset the basis of which is determined in whole or in part by reference to its basis in the hands of another person shall
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