80 STAT.]
PUBLIC LAW 89-809-NOV. 13, 1966
1561
(i) AMENDMENTS ^YITH KESPECT TO FOREIGN CORPORATIONS CARRYING ON INSURANCE BUSINESS IN UNITED STATES.—
(1) Section 842 (relating to computation of gross income) is amended to read as follows: "SEC. 842. FOREIGN CORPORATIONS BUSINESS.
CARRYING
ON
68A Stat. 267.
INSURANCE
"If a foreign corporation carrying on an insurance business within the United States would qualify under part I, II, or III of this subchapter for the taxable year if (without regard to income not effectively connected with the conduct of any trade or business within the United States) it were a domestic corporation, such corporation shall be taxable under such part on its income effectively connected with its conduct of any trade or business within the United States. With respect to the remainder of its income, which is from sources within the United States, such a foreign corporation shall be taxable as provided in section 881." (2) The table of sections for part IV of subchapter L of chapter 1 is amended by striking out the item relating to section 842 and inserting in lieu thereof the following:
26 USC 801-832.
^"f^- P isss.
"Sec. 842. Foreign corporations carrying on insurance business."
(3) Section 819 (relating to foreign life insurance companies) is amended— (A) by striking out subsections (a) and (d) and by redesignating subsections (b) and (c) as subsections (a) and (b), (B) by striking out " I n the case of any company described in subsection (a), " in subsection (a)(1) (as redesignated by subparagraph (A)) and inserting in lieu thereof "In the case of any foreign corporation taxable under this part,", (C) by striking out "subsection (c) " in the last sentence of subsection (a)(2) (as redesignated by subparagraph (A)) and inserting in lieu thereof "subsection (b)", (D) by adding at the end of subsection (a) (as redesignated by subparagraph (A)) the following new paragraph: "(3) REDUCTION OF SECTION 881 TAX.—In the case of any foreign corporation taxable under this part, there shall be determined— " (A) the amount which would be subject to tax under section 881 if the amount taxable under such section were determined without regard to sections 103 and 894, and " (B) the amount of the reduction provided by paragraph (1). , The tax under section 881 (determined without regard to this paragraph) shall be reduced (but not below zero) by an amount which is the same proportion of such tax as the amount referred to in subparagraph (B) is of the amount referred to in subparagraph (A); but such reduction in tax shall not exceed the increase in tax under this part by reason of the reduction provided by paragraph (1).", (E) by striking out "for purposes of subsection (a) " each place it appears in subsection (b) (as redesignated by subparagraph (A)) and inserting in lieu thereof "with respect to a foreign corporation", (F) by striking out "foreign life insurance company" each place it appears in such subsection (b) and inserting in lieu thereof "foreign corporation", (G) by striking out "subsection (b)(2)(A) " each place it appears in such subsection (b) and inserting in lieu thereof "subsection (a)(2)(A) ",
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