96 STAT. 464
PUBLIC LAW 97-248—SEPT. 3, 1982 "(2) FOREIGN SHAREHOLDERS; SHAREHOLDERS NOT SUBJECT TO TAX; INHABITANTS OF THE VIRGIN ISLANDS.—
"(A) IN GENERAL.—Paragraph (1)(A) shall not apply with respect to any shareholder— "(i) who is not a United States person, "(ii) who is not subject to tax under this title on intangible property income which would be allocated to such shareholder (but for this subparagraph), or "(iii) who is an inhabitant of the Virgin Islands. "(B) TREATMENT OF NONALLOCATED INTANGIBLE PROPERTY
INCOME.—For purposes of this subtitle, intangible property income of a corporation described in paragraph (I)(A) which is not included in the gross income of a shareholder of such corporation by reason of subparagraph (A)— "(i) shall be treated as income from sources within the United States, and "(ii) shall not be taken into account for purposes of determining whether the conditions specified in paragraph (1) or (2) of subsection (b) are satisfied. "(3)
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DISTRIBUTION TO MEET QUALIFICATION REQUIREMENTS.—
"(A) IN GENERAL.—If the Secretary determines that a corporation does not satisfy a condition specified in paragraph (1) or (2) of subsection (b) for any taxable year by reason of the exclusion from gross income under paragraph (1)(B), such corporation shall nevertheless be treated as satisfying such condition for such year if it makes a pro rata distribution of property after the close of such taxable year to its shareholders (designated at the time of such distribution as a distribution to meet qualification requirements) with respect to their stock in an amount which is equal to— "(i) if the condition of subsection (b)(1) is not satisfied, that portion of the gross income for the period described in subsection (b)(1)— "(I) which was not derived from sources within the Virgin Islands, and "(II) which exceeds the amount of such income for such period which would enable such corporation to satisfy the condition of subsection (b)(1), "(ii) if the condition of subsection (b)(2) is not satisfied, that portion of the aggregate gross income for such period— "(I) which was not derived from the active conduct of a trade or business within the Virgin Islands, and "(II) which exceeds the amount of such income for such period which would enable such corporation to satisfy the conditions of subsection Cb)(2), or "(iii) if neither of such conditions is satisfied, that portion of the gross income which exceeds the amount of gross income for such period which would enable such corporation to satisfy the conditions of paragraphs (1) and (2) of subsection (b). "(B) EFFECTIVELY CONNECTED INCOME.—In the case of a shareholder who is a nonresident alien individual, an inhabitant of the Virgin Islands, or a foreign corporation, trust, or estate, any distribution described in subparagraph
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