PUBLIC LAW 103-66 —AUG. 10, 1993 107 STAT. 499 section 951(a)(l) because of the exclusions in paragraphs (2) and (3) of subsection (a) of this section), and" (C) Subsection (b) of section 989 is amended by striking 26 USC 989. "section 951(a)(l)(B) and inserting "subparagraph (B) or (C) of section SSKaXD". (d) MODIFICATIONS TO PASSIVE FOREIGN INVESTMENT COMPANY RULES. — (1) ADJUSTED BASIS USED IN CERTAIN DETERMINATIONS. — Subsection (a) of section 1296 is amended by striking the material following paragraph (2) and inserting the following: "In the case of a controlled foreign corporation (or any other foreign corporation if such corporation so elects), the determination under paragraph (2) shall be based on the a4justed bases (as determined for purposes of computing earnings and profits) of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary." (2) TREATMENT OF CERTAIN SUBPART F INCLUSIONS.—Subsection (b) of section 1297 is amended by adding at the end thereof the following new paragraph: "(9) TREATMENT OF CERTAIN SUBPART F INCLUSIONS. —Any amount included in gross income under subparagraph (B) or (C) of section 951(a)(l) shall be treated as a distribution received with respect to the stock." (3) TREATMENT OF CERTAIN DEALERS IN SECURITIES. — Subsection (b) of section 1296 is amended by adding at the end thereof the following new paragraph: "(3) TREATMENT OF CERTAIN DEALERS IN SECURITIES. — "(A) IN GENERAL.— In the case of any foreign corporation which is a controlled foreign corporation (as defined in section 957(a)), the term 'passive income' does not include any income derived in the active conduct of a securities business by such corporation if such corporation is registered as a securities broker or dealer under section 15(a) of the Securities Exchange Act of 1934 or is registered as a Government securities broker or dealer under section 15C(a) of such Act. To the extent provided in regulations, such term shall not include any income derived in the active conduct of a securities business by a controlled foreign corporation which is not so registered. "(B) APPLICATION OF LOOK-THRU RULES. —For purposes of paragraph (2)(C), rules similar to the rules of subparagraph (A) of this paragraph shall apply in determining whether any income of a related person (whether or not a corporation) is passive income. "(C) LIMITATION.— The preceding provisions of this paragraph shall only apply in the case of persons who are United States shareholders (as defined in section 951(b)) in the controlled foreign corporation. " (4) LEASING AND INTANGIBLE ASSET RULES.— Section 1297 is amended by redesignating subsection (d) as subsection (f) and by inserting after subsection (c) the following new subsections: "(d) TREATMENT OF CERTAIN LEASED PROPERTY. —For purposes of this part— "(1) IN GENERAL. —Any tangible personal property with respect to which a foreign corporation is the lessee under a
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