PUBLIC LAW 104-188—AUG. 20, 1996
110 STAT. 1827
Subtitle F—Revenue Offsets
PART I—GENERAL PROVISIONS
SEC. 1601. TERMINATION OF PUERTO RICO AND POSSESSION TAX
CREDIT.
(a) IN GENERAL. —Section 936 is amended by adding at the
end the following new subsection:
" (j) TERMINATION.—
"(1) IN GENERAL.— Except as otherwise provided in this
subsection, this section shall not apply to any taxable year
beginning after December 31, 1995.
" (2) TRANSITION RULES FOR ACTIVE BUSINESS INCOME
CREDIT.—Except as provided in paragraph (3)—
"(A) ECONOMIC ACTIVITY CREDIT.—In the case of an
existing credit claimant—
"(i) with respect to a possession other than Puerto
Rico, and
"(ii) to which subsection (a)(4)(B) does not apply,
the credit determined under subsection (a)(1)(A) shall be
allowed for taxable years beginning after December 31,
1995, and before January 1, 2002.
" (B) SPECIAL RULE FOR REDUCED CREDIT.—
"(i) IN GENERAL.—In the case of an existing credit
claimant to which subsection (a)(4)(B) applies, the
credit determined under subsection (a)(1)(A) shall be
allowed for taxable years beginning after December
31, 1995, and before January 1, 1998.
"(ii) ELECTION IRREVOCABLE AFTER 1997.— An election under subsection (a)(4)(B)(iii) which is in effect
for the taxpayer's last taxable year beginning before
1997 may not be revoked unless it is revoked for the
taxpayer's first taxable year beginning in 1997 and
all subsequent taxable years.
" (C) ECONOMIC ACTIVITY CREDIT FOR PUERTO RICO. —
"For economic activity credit for Puerto Rico, see section 30A.
"(3) ADDITIONAL RESTRICTED CREDIT.—
"(A) IN GENERAL.—In the case of an existing credit
claimant—
"(i) the credit under subsection (a)(1)(A) shall be
allowed for the period beginning with the first taxable
year after the last taxable year to which subparagraph
(A) or (B) of paragraph (2), whichever is appropriate,
applied and ending with the last taxable year beginning before January 1, 2006, except that
"(ii) the aggregate amount of taxable income taken
into account under subsection (a)(1)(A) for any such
taxable year shall not exceed the adjusted base period
income of such claimant.
"(B) COORDINATION WITH SUBSECTION (a)(4). — The
amount of income described in subsection (a)(1)(A) which
is taken into account in applying subsection (a)(4) shall
be such income as reduced under this paragraph.
"(4) ADJUSTED BASE PERIOD INCOME.— For purposes of paragraph (3)—
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