76 S T A T. ]
P U B L I C LAW 8 7 - 8 3 4 - O C T. 16, 1962
1001
A foreign corporation which is a less developed c o u n t r y corporation for i t s first tax a b l e year b e g i n n i n g after December 31, 1962, shall, for purposes of t h i s section, be t r e a t e d a s h a v i n g been a less developed c o u n t r y corporation for each of i t s tax a b l e year s b e g i n n i n g before January 1, 1963. "(e)
CROSS R E F E R E N C E S. —
"(1) For inclusion in gross income of an amount equal to taxes deemed paid under subsection (a)(1), see section 78. "(2) For application of subsections (a) and (b) with respect to taxes deemed paid in a prior taxable year by a United States shareholder with respect to a controlled foreign corporation, see section 960. "(3) For reduction of credit with respect to dividends paid out of accumulated profits for years for which certain information is not furnished, see section 6038." (b) INCLUSION
I N GROSS I N C O M E OF A M O U N T
intra.
Pos<' P- 1020. Post, p. 1059.
E Q U A L TO T A X E S
DEEMED PAID,—Part II of'subchapter B of chapter 1 (relating to items specifically included in gross income) is amended by adding at the end thereof the following new section: "SEC. 78. DIVIDENDS RECEIVED FROM CERTAIN FOREIGN CORPORATIONS BY DOMESTICORPORATIONS CHOOSING FOREIGN TAX CREDIT. "If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under section 902(a)(1) (relating to credit tor corporate stockholder in foreign corporation) or under section 9 6 0 (a)(1)(C) (relating to taxes paid by foreign corporation) for such taxable year shall be treated for purposes of this title (other than section 245) as a dividend received by such domestic corporation from the foreign corporation."
26 USC 71-77.
Ante, p. 999. Post, p. 1020.
(c) DETERMINATION OF SOURCE OF DIVIDENDS RECEIVED FROM (CERTAIN FOREIGN CORPORATIONS.—Section 8 6 1 (a)(2)(B) (relating
to dividends from foreign corporations treated as income from sources within the United States) is amended by striking out "to the extent exceeding the amount of the deduction allowable under section 245 26 USC 24s; in respect of such dividends" and inserting in lieu thereof "to the ^"*°' P-^^extent exceeding the amount which is 100/85ths of the amount of the deduction allowable under section 245 in respect of such dividends". (d)
TECHNICAL AMENDMENTS.—
(1) The table of sections for part II of subchapter B of chapter 1 is amended by adding at the end thereof the following: "Sec. 78. Dividends received from certain foreign corporations by domestic corporations choosing foreign tax credit."
(2) Section 535(b)(1) and the first sentence of section 545(b) 26 USC 535, (1) are each amended by striking out "accrued during the taxable ^^^" year," and inserting in lieu thereof "accrued during the taxable year or deemed to be paid by a domestic corporation under section 902(a)(1) or 960(a)(1)(C) for the taxable year,". (3) Section 901(d) is amended by adding the following new 26 USC 901. paragraph: "(4) For reduction of credit for failure of a United States person to furnish certain information with respect to a foreign corporation controlled by him, see section 6038." (e) EFFECTIVE DATE.—The amendments made by this section shall
apply— (1) in respect of any distribution received by a domestic corporation after December 31, 1964, and (2) in respect of any distribution received by a domestic corporation before January 1, 1965, in a taxable year of such
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