118 STAT. 1498 PUBLIC LAW 108–357—OCT. 22, 2004 SEC. 405. ATTRIBUTION OF STOCK OWNERSHIP THROUGH PARTNER SHIPS TO APPLY IN DETERMINING SECTION 902 AND 960 CREDITS. (a) IN GENERAL.—Subsection (c) of section 902 is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph: ‘‘(7) CONSTRUCTIVE OWNERSHIP THROUGH PARTNERSHIPS.— Stock owned, directly or indirectly, by or for a partnership shall be considered as being owned proportionately by its part ners. Stock considered to be owned by a person by reason of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person. The Secretary may prescribe such regulations as may be necessary to carry out the purposes of this paragraph, including rules to account for special partnership allocations of dividends, credits, and other incidents of ownership of stock in determining proportionate ownership.’’. (b) CLARIFICATION OF COMPARABLE ATTRIBUTION UNDER SEC TION 901(b)(5).—Paragraph (5) of section 901(b) is amended by striking ‘‘any individual’’ and inserting ‘‘any person’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to taxes of foreign corporations for taxable years of such corporations beginning after the date of the enactment of this Act. SEC. 406. CLARIFICATION OF TREATMENT OF CERTAIN TRANSFERS OF INTANGIBLE PROPERTY. (a) IN GENERAL.—Subparagraph (C) of section 367(d)(2) is amended by adding at the end the following new sentence: ‘‘For purposes of applying section 904(d), any such amount shall be treated in the same manner as if such amount were a royalty.’’. (b) EFFECTIVE DATE.—The amendment made by this section shall apply to amounts treated as received pursuant to section 367(d)(2) of the Internal Revenue Code of 1986 on or after August 5, 1997. SEC. 407. UNITED STATES PROPERTY NOT TO INCLUDE CERTAIN ASSETS OF CONTROLLED FOREIGN CORPORATION. (a) IN GENERAL.—Section 956(c)(2) (relating to exceptions from property treated as United States property) is amended by striking ‘‘and’’ at the end of subparagraph (J), by striking the period at the end of subparagraph (K) and inserting a semicolon, and by adding at the end the following new subparagraphs: ‘‘(L) securities acquired and held by a controlled foreign corporation in the ordinary course of its business as a dealer in securities if— ‘‘(i) the dealer accounts for the securities as securi ties held primarily for sale to customers in the ordinary course of business, and ‘‘(ii) the dealer disposes of the securities (or such securities mature while held by the dealer) within a period consistent with the holding of securities for sale to customers in the ordinary course of business; and ‘‘(M) an obligation of a United States person which— ‘‘(i) is not a domestic corporation, and ‘‘(ii) is not— 26 USC 367 note. 26 USC 901 note.
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