118 STAT. 1588 PUBLIC LAW 108–357—OCT. 22, 2004 on the date which is 15 days before the date on which the right to receive payment of such item arises, or ‘‘(B) to the extent that the recipient of the item is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. This paragraph shall not apply to any dividend to which sub section (k) applies. ‘‘(2) EXCEPTION FOR TAXES PAID BY DEALERS.— ‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to any qualified tax with respect to any property held in the active conduct in a foreign country of a business as a dealer in such property. ‘‘(B) QUALIFIED TAX.—For purposes of subparagraph (A), the term ‘qualified tax’ means a tax paid to a foreign country (other than the foreign country referred to in subparagraph (A)) if— ‘‘(i) the item to which such tax is attributable is subject to taxation on a net basis by the country referred to in subparagraph (A), and ‘‘(ii) such country allows a credit against its net basis tax for the full amount of the tax paid to such other foreign country. ‘‘(C) DEALER.—For purposes of subparagraph (A), the term ‘dealer’ means— ‘‘(i) with respect to a security, any person to whom paragraphs (1) and (2) of subsection (k) would not apply by reason of paragraph (4) thereof if such secu rity were stock, and ‘‘(ii) with respect to any other property, any person with respect to whom such property is described in section 1221(a)(1). ‘‘(D) REGULATIONS.—The Secretary may prescribe such regulations as may be appropriate to carry out this para graph, including regulations to prevent the abuse of the exception provided by this paragraph and to treat other taxes as qualified taxes. ‘‘(3) EXCEPTIONS.—The Secretary may by regulation provide that paragraph (1) shall not apply to property where the Sec retary determines that the application of paragraph (1) to such property is not necessary to carry out the purposes of this subsection. ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar to the rules of paragraphs (5), (6), and (7) of subsection (k) shall apply for purposes of this subsection. ‘‘(5) DETERMINATION OF HOLDING PERIOD.—Holding periods shall be determined for purposes of this subsection without regard to section 1235 or any similar rule.’’. (b) CONFORMING AMENDMENT.—The heading of subsection (k) of section 901 is amended by inserting ‘‘ON DIVIDENDS’’ after ‘‘TAXES’’. (c) EFFECTIVE DATE.—The amendments made by this section shall apply to amounts paid or accrued more than 30 days after the date of the enactment of this Act. 26 USC 901 note.
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