PUBLIC LAW 94-455—OCT. 4, 1976
90 STAT. 1627
accumulated profits i n excess of such income, w a r profits, and excess profits taxes (other than those deemed p a i d). " (b) FoEEiGN CORPORATION.—
SUBSIDIARY
OF
FIRST
AND SECOND
FOREIGN
" (1) O N E T2ER.—If the foreign corporation described in subsection (a) (hereinafter i n this subsection referred to as the 'first foreign corporation') owns 10 percent or more of the voting stock of a second foreign corporation from which i t receives dividends in any taxable year, i t shall be deemed to have paid the same proportion of any income, w a r profits, o r excess profits taxes paid or deemed to be paid by such second foreign corporation to any foreign country or to any possession of the United States, on or with respect to the accumulated profits of such second foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits in excess of such income, war profits, and excess profits taxes (other than those deemed p a i d). " (2) T w o TIERS.—If such first foreign corporation owns 10 percent or more of the voting stock of a second foreign corporation which, in turn, owns 10 percent or more of the voting stock of a t h i r d foreign corporation from which the second foreign corporation receives dividends in any taxable year, the second foreign corporation shall be deemed to have paid the same proportion of any income, w a r profits, or excess profits taxes paid by such t h i r d foreign corporation to any foreign country o r to any possession of the United States, on or with respect to the accumulated profits of such t h i r d foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits in excess of such income, w a r profits, and excess profits taxes. " (3) VOTING
STOCK
REQUIREMENT.—For
purposes
'
of
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subpart— " (A) paragraph (1) shall not apply unless the percentage of voting stock owned by the domestic corporation in the first foreign corporation and the percentage of voting stock owned by the first foreign corporation in the second foreign corporation when multiplied together equal at least 5 percent, and " (B) paragraph (2) shall not apply unless the percentage arrived at for purposes of a p p l y i n g paragraph (1) when multiplied by the percentage of voting stock owned by the second foreign corporation in the t h i r d foreign corporation is equal to a t least 5 percent. " (c) APPLICABLE RULES. — " (1) ACCUMULATED PROFITS DEFINED.—For purposes of this sec-
tion, the t e n n 'accumulated profits' means, with respect to any foreign corporation, the amount of its gains, profits, or income computed without reduction by the amount of the income, w a r profits, and excess profits taxes imposed on or with respect to such profits o r income by any foreign country or by any possession of the United States. The Secretary 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 i n other respects treating dividends as h a v i n g
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