Page:United States Statutes at Large Volume 85.djvu/556

This page needs to be proofread.
[85 STAT. 526]
[85 STAT. 526]
PUBLIC LAW 92-000—MMMM. DD, 1971

526

76^st^f'97*7^'*' 26 USC 30*1.

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

tion provided by subsection (d) applies with respect to any activity shall, if the taxpayer so elects, not be made before the close of the fourth taxable year (sixth taxable year, in the case of an activity described in the last sentence of such subsection) following the taxable year in which the taxpayer first engages in the activity. For purposes of the preceding sentence, a taxpayer shall be treated as not having engaged in an activity during any taxable year beginning before January 1, 1970. " (2) INITIAL PERIOD.—If the taxpayer makes an election under paragraph (1), the presumption provided by subsection (d) shall apply to each taxable year in the 5-taxable year (or 7-taxable year) period beginning with the taxable year in which the taxpayer first engages in the activity, if the gross income derived from the activity for 2 or more of the taxable years in such period exceeds the deductions attributable to the activity (determined without regard to whether or not the activity is engaged in for profit). "(3) ELECTION.—An election under paragraph (1) shall be made at such time and manner, and subject to such terms and conditions, as the Secretary or his delegate may prescribe." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1969. SEC. 312. CERTAIN DISTRIBUTIONS TO FOREIGN CORPORATIONS. (^) ^^ GENERAL.—Section 301 (relating to corporate distributions of property) is amended by— (1) inserting in subsection (b)(1)(B), after "corporation" the first time it appears, a comma and "unless subparagraph (D) applies"; (2) adding at the end of subsection (b)(1) the following new subparagraph: " (D) FOREIGN CORPORATE DISTRIBUTEES.—In the case of a distribution to a shareholder which is a foreign corporation, if the amount received by the foreign corporation is not effectively connected with the conduct by it of a trade or business within the United States, the amount of the money received, plus the fair market value of the other property received."; (3) inserting in subsection (d)(2), after "corporation" the first time it appears, a comma and "unless paragraph (3) applies"; and (4) redesignating paragraph (3) of subsection (d) as (4) and inserting after paragraph (2) thereof the following new paragraph: "(3) FOREIGN CORPORATE DISTRIBUTEES.—In the case of a distribution of property to a shareholder which is a foreign corporation, if the amount received by the foreign corporation is not effectively connected with the conduct by it of a trade or business within the United States, the fair market value of the property received." (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply with respect to distributions made after November 8, 1971. SEC. 313. ORIGINAL ISSUE DISCOUNT. (a) SEPARATE TREATMENT OF ORIGINAL ISSUE DISCOUNT.—Sections

1555-^68Asm' 357.' ^* 83 Stat. 611.

8 T 1 ( ^) (1) ( ^) ' 881(a)(1), and 1441(b) (relating to taxation and withholding on noneffectively connected income of nonresident alien individuals and foreign corporations) are each amended by inserting after the word "interest" the following: "(other than original issue discount as defined in section 1232(b))".