Page:United States Statutes at Large Volume 100 Part 3.djvu/721

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PUBLIC LAW 99-000—MMMM. DD, 1986

PUBLIC LAW 99-514—OCT. 22, 1986

100 STAT. 2529

"(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— "(1) POST-1986 UNDISTRIBUTED EARNINGS.—The term 'post-1986 undistributed earnings' means the amount of the earnings and profits of the foreign corporation (computed in accordance with sections 964 and 986) accumulated in taxable years beginning after December 31, 1986— "(A) as of the close of the taxable year of the foreign corporation in which the dividend is distributed, and "(B) without diminution by reason of dividends distributed during such taxable year. "(2) POST-1986 FOREIGN INCOME TAXES.—The term 'post-1986 foreign income taxes' means the sum of— "(A) the foreign income taxes with respect to the taxable year of the foreign corporation in which the dividend is distributed, and "(B) the foreign income taxes with respect to prior taxable years beginning after December 31, 1986, to the extent •' such foreign taxes were not deemed paid with respect to dividends distributed by the foreign corporation in prior taxable years. "(3) SPECIAL RULE WHERE DOMESTICORPORATION ACQUIRES lo PERCENT OF FOREIGN CORPORATION AFTER DECEMBER 31, 1986.—

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"(A) IN GENERAL.—If the 1st day on which the ownership requirements of subparagraph (B) are met with respect to any foreign corporation is in a taxable year of such corporation beginning after December 31, 1986, the post-1986 undistributed earnings and the post-1986 foreign income taxes of such foreign corporation shall be determined by taking into account only periods beginning on and after the 1st day of the 1st taxable year in which such ownership requirements are met. "(B) OWNERSHIP REQUIREMENTS.—The ownership requirements of this subparagraph are met with respect to any foreign corporation if— "(i) 10 percent or more of the voting stock of such foreign corporation is owned by a domestic corporation, "(ii) the requirements of subsection (b)(3)(A) are met with respect to such foreign corporation and 10 percent or more of the voting stock of such foreign corporation is owned by another foreign corporation described in clause (i), or "(iii) the requirements of subsection (b)(3)(B) are met with respect to such foreign corporation and 10 percent or more of the voting stock of such foreign corporation is owned by another foreign corporation described in clause (ii). "(4) FOREIGN INCOME TAXES.—

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"(A) IN GENERAL.—The term 'foreign income taxes' means any income, war profits, or excess profits taxes paid by the foreign corporation to any foreign country or possession of the United States. "(B) TREATMENT OF DEEMED TAXES.—Except for purposes of determining the amount of the post-1986 foreign income taxes of a 3rd foreign corporation referred to in subsection (b)(2), the term 'foreign income taxes' includes any such