1040
PUBLIC LAW 87-834-OCT. 16, 1962
[76 STAT.
"(2) each qualified shareholder of such foreign investment company— " (A) shall include in gross income and treat as paid by him his proportionate share of such taxes, and " (B) shall treat, for purposes of applying subpart A of part III of subchapter N, his proportionate share of such taxes as having been paid to the country in which the foreign investment company is incorporated, and " (C) shall treat as gross income from sources within the country in which the foreign investment company is incorporated, for purposes of applying subpart A of part III of subchapter N, the sum of his proportionate share of such taxes and any dividend paid to him by such foreign investment company. "(g) NOTICE TO SHAREHOLDERS.—The amounts to be treated by qualified shareholders, for purposes of subsection (f)(2), as their proportionate share of the taxes described in subsection (f)(1)(A) paid by a foreign investment company shall not exceed the amounts so designated by the foreign investment company in a written notice mailed to its shareholders not later than 45 days after the close of its taxable year. "(h)
MANNER OF MAKING ELECTION AND NOTIFYING SHAREHOLD-
ERS.—The election provided in subsection (f) and the notice to shareliolders required by subsection (g) shall be made in such manner as the Secretary or his delegate may prescribe by regulations. " (i) Loss ON SALE OR EXCHANGE OF CERTAIN STOCK HELD LESS T H A N 6 MONTHS.—If—
"(1) under this section, any qualified shareholder treats any amount designated under subsection (a)(1)(B) with respect to a share of stock as long-term capital gain, and "(2) such share is held by the taxpayer for less than 6 months, then any loss on the sale or exchange of such share shall, to the extent of the amount described in paragraph (1), be treated as loss from the sale or exchange of a capital asset held for more than 6 months." (2) The table of sections for such part IV is amended by adding at the end thereof the following: "Sec. 1246. Gain on foreign investment company stock. "Sec. 1247. IJlection by foreign investment companies to distribute income currently." (b) CONFORMING AMENDMENTS. — (1) E A R N I N G S AND PROFITS OF FOREKJN INVESTMENT C O M P A N I E S. —
Ante, p. 6; 26 USC 312.
Section 312 (relating to effect on earnings and profits) is amended |jy adding after subsection (k) the following new subsection: "(1)
Ante, p. 1036. Ante, p. 988.
EARNINGS AND PROFITS OF FOREIGN INVESTMENT COMPANIES.— "(1) ALLOCATION WITHIN AFFILIATED GROUP.—In the case of a
sale or exchange of stock in a foreign investment company (as defined in section 1246(b)) by a United States person (as defined in section 7701(a) (30)), if such company is a member of an affiliated group, then the accumulated earnings and profits of all members of such affiliated group shall be allocated, under regulations prescribed by the Secretary or his delegate, in such manner as is proper to carry out the purposes of section 1246. "(2) AFFILIATED GROUP DEFINED.—For purposes of paragraph
26 USC 1504.
(1) of this subsection, the term 'affiliated group' has the meaning assigned to such term by section 1504(a); except that (A) 'more than 50 percent' shall be substituted for '80 percent or more', and (B) all corporations shall be treated as includible corporations (without regard to the provisions of section 1504(b)).
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