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PUBLIC LAW 87-834-OCT. 16, 1962
[76 STAT.
" (b) FOREIGN SUBSIDIARY OF FOREIGN CORPORATION.—If such foreign corporation owns 50 percent or more of the voting stock of another foreign corporation from which it receives dividends in any taxable year, it shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid by such other foreign corporation to any foreign country or to any possession of the United States, on or with respect to the accumulated profits of the corporation from which such dividends were paid which— "(1) for purposes of applying subsection (a)(1), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(A)) of such other foreign corporation from which such dividends were paid in excess of such income, war profits, and excess profits taxes, or "(2) for purposes of applying subsection (a)(2), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(B)) of such other foreign corporation from which such dividends were paid. "(c)
Post. p. 1014.
APPLICABLE RULES.— "(1) ACCUMULATED PROFITS DEFINED.—For
purposes of this section, the term 'accumulated profits' means with respect to any foreign corporation— " (A) for purposes of subsections (a)(1) and (b)(1), the amount of its gains, profits, or income computed without reduction by the amount of the income, war profits, and excess profits taxes imposed on or with respect to such profits or income by any foreign country or any possession of the United States; and " (B) for purposes of subsections (a)(2) and (b)(2), the amount of its gains, profits, or income in excess of the income, war profits, and excess profits taxes imposed on or with respect to such profits or income. The Secretary or his delegate shall have full power to determine from the accumulated profits of what year or years such dividends were paid, treating dividends paid in the first 60 days of any year as having been paid from the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. "(2) ACCOUNTING PERIODS.—In the case of a foreign corporation, the income, war profits, and excess profits taxes of which are determined on the basis or an accounting period of less than 1 year, the word 'year' as used in this subsection shall be construed to mean such accounting period. " (d) LESS DEVELOPED COUNTRY CORPORATION DEFINED.—For purposes of this section, the term 'less developed country corporation' means— "(1) a foreign corporation which, for its taxable year, is a less developed country corporation within the meaning of section 965(c)(1) or (2), and "(2) a foreign corporation which owns 10 percent or more of the total combined voting pow«r of all classes of stock entitled to vote of a foreign corporation which is a less developed country - corporation within the meaning of section 955(c)(1), and— • " (A) 80 percent or more of the gross income of which for its taxable year meets the requirement of section 955(c)(1) (A); and " (B) 80 percent or more in value of the assets of which on each day of such year consists of property described in section 955(c)(1)(B).
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