118 STAT. 1510 PUBLIC LAW 108–357—OCT. 22, 2004 (32) The table of sections for part IV of subchapter P of chapter 1 is amended by striking the items relating to sections 1246 and 1247. (33) The table of sections for subpart A of part III of subchapter A of chapter 61 is amended by striking the item relating to section 6035. (d) EFFECTIVE DATES.— (1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end. (2) SUBSECTION (c)(27).—The amendments made by sub section (c)(27) shall apply to disclosures of return or return information with respect to taxable years beginning after December 31, 2004. SEC. 414. DETERMINATION OF FOREIGN PERSONAL HOLDING COM PANY INCOME WITH RESPECT TO TRANSACTIONS IN COMMODITIES. (a) IN GENERAL.—Clauses (i) and (ii) of section 954(c)(1)(C) (relating to commodity transactions) are amended to read as follows: ‘‘(i) arise out of commodity hedging transactions (as defined in paragraph (4)(A)), ‘‘(ii) are active business gains or losses from the sale of commodities, but only if substantially all of the controlled foreign corporation’s commodities are property described in paragraph (1), (2), or (8) of section 1221(a), or’’. (b) DEFINITION AND SPECIAL RULES.—Subsection (c) of section 954, as amended by this Act, is amended by adding after paragraph (4) the following new paragraph: ‘‘(5) DEFINITION AND SPECIAL RULES RELATING TO COM MODITY TRANSACTIONS.— ‘‘(A) COMMODITY HEDGING TRANSACTIONS.—For pur poses of paragraph (1)(C)(i), the term ‘commodity hedging transaction’ means any transaction with respect to a com modity if such transaction— ‘‘(i) is a hedging transaction as defined in section 1221(b)(2), determined— ‘‘(I) without regard to subparagraph (A)(ii) thereof, ‘‘(II) by applying subparagraph (A)(i) thereof by substituting ‘ordinary property or property described in section 1231(b)’ for ‘ordinary property’, and ‘‘(III) by substituting ‘controlled foreign cor poration’ for ‘taxpayer’ each place it appears, and ‘‘(ii) is clearly identified as such in accordance with section 1221(a)(7). ‘‘(B) TREATMENT OF DEALER ACTIVITIES UNDER PARA GRAPH (1)(C).—Commodities with respect to which gains and losses are not taken into account under paragraph (2)(C) in computing a controlled foreign corporation’s for eign personal holding company income shall not be taken into account in applying the substantially all test under paragraph (1)(C)(ii) to such corporation. 26 USC 1 note.
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