Page:United States Statutes at Large Volume 110 Part 3.djvu/182

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110 STAT. 1912 PUBLIC LAW 104-188—AUG. 20, 1996 the purposes of this subsection, including regulations providing that paragraph (1) shall not apply in appropriate cases.". (2) The last sentence of subsection (c) of section 672 is amended by inserting "subsection (f) and" before "sections 674". (b) CREDIT FOR CERTAIN TAXES.— (1) Paragraph (2) of section 665(d) is amended by adding at the end the following new sentence: "Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the term 'taxes imposed on the trust' includes the allocable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.". (2) Paragraph (5) of section 901(b) is amended by adding at the end the following new sentence: "Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the allocable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.". (c) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS THROUGH NOMINEES. — (1) Section 643 is amended by adding at the end the following new subsection: " (h) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS THROUGH NOMINEES. —For purposes of this part, any amount paid to a United States person which is derived directly or indirectly from a foreign trust of which the payor is not the grantor shall be deemed in the year of pa5anent to have been directly paid by the foreign trust to such United States person.". (2) Section 665 is amended by striking subsection (c). 26 USC 643 note. (d) EFFECTIVE DATE. — (1) IN GENERAL.— Except as provided by paragraph (2), the amendments made by this section shall take effect on the date of the enactment of this Act. (2) EXCEPTION FOR CERTAIN TRUSTS.—The amendments made by this section shall not apply to any trust— (A) which is treated as owned by the grantor under section 676 or 677 (other than subsection (a)(3) thereof) of the Internal Revenue Code of 1986, and (B) which is in existence on September 19, 1995. The preceding sentence shall not apply to the portion of any such trust attributable to any transfer to such trust after September 19, 1995. 26 USC 1491 (e) TRANSITIONAL RULE.—I f — note. (1) by reason of the amendments made by this section, any person other than a United States person ceases to be treated as the owner of a portion of a domestic trust, and (2) before January 1, 1997, such trust becomes a foreign trust, or the assets of such trust are transferred to a foreign trust,