118 STAT. 1517 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(ii) which are determined by disregarding— ‘‘(I) 1 taxable year for which the sum of the amounts described in clauses (i), (ii), and (iii) of subsection (b)(2)(B) is the largest, and ‘‘(II) 1 taxable year for which such sum is the smallest. ‘‘(B) SHORTER PERIOD.—If the taxpayer has fewer than 5 taxable years ending on or before June 30, 2003, then in lieu of applying subparagraph (A), the base period years shall include all the taxable years of the taxpayer ending on or before June 30, 2003. ‘‘(C) MERGERS, ACQUISITIONS, ETC.— ‘‘(i) IN GENERAL.—Rules similar to the rules of subparagraphs (A) and (B) of section 41(f)(3) shall apply for purposes of this paragraph. ‘‘(ii) SPIN OFFS, ETC.—If there is a distribution to which section 355 (or so much of section 356 as relates to section 355) applies during the 5 year period referred to in subparagraph (A)(i) and the controlled corporation (within the meaning of section 355) is a United States shareholder— ‘‘(I) the controlled corporation shall be treated as being in existence during the period that the distributing corporation (within the meaning of section 355) is in existence, and ‘‘(II) for purposes of applying subsection (b)(2) to the controlled corporation and the distributing corporation, amounts described in subsection (b)(2)(B) which are received or includible by the distributing corporation or controlled corporation (as the case may be) before the distribution referred to in subclause (I) from a controlled for eign corporation shall be allocated between such corporations in proportion to their respective interests as United States shareholders of such controlled foreign corporation immediately after such distribution. Subclause (II) shall not apply if neither the controlled corporation nor the distributing corporation is a United States shareholder of such controlled foreign corpora tion immediately after such distribution. ‘‘(3) DIVIDEND.—The term ‘dividend’ shall not include amounts includible in gross income as a dividend under section 78, 367, or 1248. In the case of a liquidation under section 332 to which section 367(b) applies, the preceding sentence shall not apply to the extent the United States shareholder actually receives cash as part of the liquidation. ‘‘(4) COORDINATION WITH DIVIDENDS RECEIVED DEDUC TION.—No deduction shall be allowed under section 243 or 245 for any dividend for which a deduction is allowed under this section. ‘‘(5) CONTROLLED GROUPS.— ‘‘(A) IN GENERAL.—All United States shareholders which are members of an affiliated group filing a consoli dated return under section 1501 shall be treated as one United States shareholder. Applicability.
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