118 STAT. 1508 PUBLIC LAW 108–357—OCT. 22, 2004 ‘‘(3) UNITED STATES SHAREHOLDER.—The term ‘United States shareholder’ has the meaning given to such term by section 951(b), except that, in the case of a foreign corporation having related person insurance income (as defined in section 953(c)(2)), the Secretary may treat any person as a United States shareholder for purposes of this section if such person is treated as a United States shareholder under section 953(c)(1).’’. (D) Subsection (c) of section 898 is amended to read as follows: ‘‘(c) DETERMINATION OF REQUIRED YEAR.— ‘‘(1) IN GENERAL.—The required year is— ‘‘(A) the majority U.S. shareholder year, or ‘‘(B) if there is no majority U.S. shareholder year, the taxable year prescribed under regulations. ‘‘(2) 1 MONTH DEFERRAL ALLOWED.—A specified foreign cor poration may elect, in lieu of the taxable year under paragraph (1)(A), a taxable year beginning 1 month earlier than the majority U.S. shareholder year. ‘‘(3) MAJORITY U.S. SHAREHOLDER YEAR.— ‘‘(A) IN GENERAL.—For purposes of this subsection, the term ‘majority U.S. shareholder year’ means the taxable year (if any) which, on each testing day, constituted the taxable year of— ‘‘(i) each United States shareholder described in subsection (b)(2)(A), and ‘‘(ii) each United States shareholder not described in clause (i) whose stock was treated as owned under subsection (b)(2)(B) by any shareholder described in such clause. ‘‘(B) TESTING DAY.—The testing days shall be— ‘‘(i) the first day of the corporation’s taxable year (determined without regard to this section), or ‘‘(ii) the days during such representative period as the Secretary may prescribe.’’. (14) Clause (ii) of section 904(d)(2)(A) is amended to read as follows: ‘‘(ii) CERTAIN AMOUNTS INCLUDED.—Except as pro vided in clause (iii), the term ‘passive income’ includes, except as provided in subparagraph (E)(iii) or para graph (3)(I), any amount includible in gross income under section 1293 (relating to certain passive foreign investment companies).’’. (15)(A) Subparagraph (A) of section 904(h)(1), as redesig nated by this Act, is amended by adding ‘‘or’’ at the end of clause (i), by striking clause (ii), and by redesignating clause (iii) as clause (ii). (B) The paragraph heading of paragraph (2) of section 904(h), as so redesignated, is amended by striking ‘‘FOREIGN PERSONAL HOLDING OR’’. (16) Section 951 is amended by striking subsections (c) and (d) and by redesignating subsections (e) and (f) as sub sections (c) and (d), respectively. (17) Paragraph (3) of section 989(b) is amended by striking ‘‘, 551(a),’’. (18) Paragraph (5) of section 1014(b) is amended by inserting ‘‘and before January 1, 2005,’’ after ‘‘August 26, 1937,’’.
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