Page 151 - Tax Reform

PUBLIC LAW 115–97—DEC. 22, 2017 131 STAT. 2201

‘‘(e) SPECIFIED FOREIGN CORPORATION.—
‘‘(1) IN GENERAL.—For purposes of this section, the term
‘specified foreign corporation’ means—
‘‘(A) any controlled foreign corporation, and
‘‘(B) any foreign corporation with respect to which one
or more domestic corporations is a United States share-
holder.
‘‘(2) APPLICATION TO CERTAIN FOREIGN CORPORATIONS.—For
purposes of sections 951 and 961, a foreign corporation
described in paragraph (1)(B) shall be treated as a controlled
foreign corporation solely for purposes of taking into account
the subpart F income of such corporation under subsection
(a) (and for purposes of applying subsection (f)).
‘‘(3) EXCLUSION OF PASSIVE FOREIGN INVESTMENT COMPA-
NIES.—Such term shall not include any corporation which is
a passive foreign investment company (as defined in section
1297) with respect to the shareholder and which is not a
controlled foreign corporation.
‘‘(f) DETERMINATIONS OF PRO RATA SHARE.—
‘‘(1) IN GENERAL.—For purposes of this section, the deter-
mination of any United States shareholder’s pro rata share
of any amount with respect to any specified foreign corporation
shall be determined under rules similar to the rules of section
951(a)(2) by treating such amount in the same manner as
subpart F income (and by treating such specified foreign cor-
poration as a controlled foreign corporation).
‘‘(2) SPECIAL RULES.—The portion which is included in the
income of a United States shareholder under section 951(a)(1)
by reason of subsection (a) which is equal to the deduction
allowed under subsection (c) by reason of such inclusion—
‘‘(A) shall be treated as income exempt from tax for
purposes of sections 705(a)(1)(B) and 1367(a)(1)(A), and
‘‘(B) shall not be treated as income exempt from tax
for purposes of determining whether an adjustment shall
be made to an accumulated adjustment account under sec-
tion 1368(e)(1)(A).
‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.—
‘‘(1) IN GENERAL.—No credit shall be allowed under section
901 for the applicable percentage of any taxes paid or accrued
(or treated as paid or accrued) with respect to any amount
for which a deduction is allowed under this section.
‘‘(2) APPLICABLE PERCENTAGE.—For purposes of this sub-
section, the term ‘applicable percentage’ means the amount
(expressed as a percentage) equal to the sum of—
‘‘(A) 0.771 multiplied by the ratio of—
‘‘(i) the excess to which subsection (c)(1)(A) applies,
divided by
‘‘(ii) the sum of such excess plus the amount to
which subsection (c)(1)(B) applies, plus
‘‘(B) 0.557 multiplied by the ratio of—
‘‘(i) the amount to which subsection (c)(1)(B)
applies, divided by
‘‘(ii) the sum described in subparagraph (A)(ii).
‘‘(3) DENIAL OF DEDUCTION.—No deduction shall be allowed
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under this chapter for any tax for which credit is not allowable
under section 901 by reason of paragraph (1) (determined by