SEC. 895 (added 1961)-Continued "SEC. 895. INCOME DERIVED BY A FOREIGN CENTRAL BANK OF Applicability: Income received in taxable years beginning after December 31, 1960. (Id., § 1(c), 75 Stat. 64.) CH. 1, SUBCH. N, PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES (68A Stat. 285, ff.): Table___ (Subparts F and G added) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 12(b) (3), 76 Stat. 1031: "Subpart F. Controlled foreign corporations. Applicability: Taxable years of foreign corporations beginning after December 31, 1962, and taxable years of United States shareholders within which or with which such taxable years of such foreign corporations end. (Id., § 12(c), 76 Stat. 1031.) CH. 1, SUBCH. N, PART III, SUBPART A-FOREIGN TAX CREDIT (68A Stat. 285-289): NOTE: The table of sections for Subpart A of Part III of Subchapter N of "Sec. 901. Taxes of foreign countries and of possessions of United States. "Sec. 903. Credit for taxes in lieu of income, etc., taxes. "Sec. 904. Limitation on credit. "Sec. 905. Applicable rules." This table has not been amended. SEC. 901. TAXES OF FOREIGN COUNTRIES AND OF POSSESSIONS OF UNITED STATES (68A Stat. 285-286): (a)........ Sept. 14, 1960, H.R. 10087, P.L. 86-780, § 3(a), 74 Stat. 1013: The table of subparts for Part III of Subchapter N of Chapter 1 originally read as follow (68A Stat. 285): "Subpart A. Foreign tax credit. "Subpart B. Earned income of citizens of United States. "Subpart C. Western Hemisphere trade corporations. "Subpart D. Possessions of the United States. "Subpart E. China Trade Act corporations." 263 Subsection (a) of section 901 originally read as follows (68A Stat. 285): "(a) ALLOWANCE OF CREDIT.-If the taxpayer chooses to have the benefits of this subpart, the tax imposed by this chapter shall, subject to the limitation of section 904, be credited with the amounts provided in the applicable paragraph of subsection (b) plus, in the case of a corporation, the taxes deemed to have been paid under section 902. Such choice may be made or changed at any time prior to the expiration of the period prescribed for making a claim for credit or refund of the tax against which the credit is allowable. The credit shall not be allowed against the tax imposed by section 531 (relating to the tax on accumulated earnings), against the additional tax imposed for the taxable year under section 1333 (relating to war loss recoveries), or against the personal holding company tax imposed by section 541." SEC. 901-Continued (a) (amended 1960)-Continued Do. Do... (b). (in part) Sept. 14, 1960, H.R. 10087, P.L. 86-780 83(b) 74 Stat. 1013: "Such choice for any taxable year may be made or changed at any time before the expiration of the period prescribed for making a claim for credit or refund of the tax imposed by this chapter for such taxable year." Applicability: Taxable years beginning after December 31, 1953, and ending after August 16, 1954. (Id., § 4, 74 Stat. 1013. See n. 264.) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 12(b) (1), 76 Stat. 1031: Amended Sec. 901(a) (as amended by P.L. 86-780, § 3(a), (b)) by striking out "section 902" and inserting in lieu thereof "sections 902 and 960". Applicability: "The amendments made by this section shall apply with respect to taxable years of foreign corporations beginning after December 31, 1962, and to taxable years of United States shareholders within which or with which such taxable years of such foreign corporations end.' "265 (Id., § 12(c), 76 Stat. 1031.) Sept. 14, 1960, H.R. 10087, P.L. 86-780, § 3(a), 74 Stat. 1013: "the limitation of section 904" and inserting in lieu thereof "the applicable limitation of section 904". 264 Section 4 of P.L. 86-780 provided as follows: "SEC. 4. The amendments made by the first section, section 2, and subsection (a) of section 3 of this Act shall apply with respect to taxable years beginning after December 31, 1960. The amendment made by subsection (b) of section 3 of this Act shall apply with respect to taxable years beginning after December 31, 1953, and ending after August 16, 1954. The amendments made by subsection (c) of section 3 of this Act shall apply with respect to taxable years beginning after December 31, 1957." The amendments referred to in such section 4 were as follows: Section 1 (a), (b), (c), and (d) amended Code Sec. 904; Section 2 amended Code Sec. 1503; Section 3(a) amended Code Sec. 901 (a) and (b); Section 3(b) amended in full the second sentence of Code Sec. 901(a); Section 3(c) amended Code Sec. 6501. These amendments are set forth herein in their proper context. 265 The amendments made by section 12 of P.L. 87-834 (set forth herein in their proper context) were as follows: Subsection (a) added Subparts F (secs. 951-964) and G (secs. 970-972) to Part III of Subchapter N of Chapter 1; Subsection (b) amended (1) Code Sec. 901; (2) Code Sec. 904(g); (3) the table of Subparts for Part III of Subchapter N of Chapter 1; (4) Code Sec. 1016(a). SEC. 901-Continued (b) (amended 1960)-Continued (d)(1)_ (in part) (d) (4) (added) Applicability: Taxable years beginning after December 31, 1960. (Id., § 4, 74 Stat. 1013. See n. 264, p. 402 above.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 207 (b) (7), 78 Stat. 42: "section 164" and inserting in lieu thereof "sections 164 and 275". Applicability: Taxable years beginning after December 31, 1963. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 9(d) (3), 76 Stat. 1001: "(4) For reduction of credit for failure of a United States person to furnish certain information with respect to a foreign corporation controlled by him, see section 6038." Applicability: The amendments made by § 9 of P.L. 87-834 are applicable with respect to any distribution received by a domestic corporation after December 31, 1964, and with respect to any distribution received by a domestic corporation before January 1, 1965, in a taxable year of such corporation beginning after December 31, 1962, but only to the extent that such distribution is made out of the accumulated profits of a foreign corporation for a taxable year (of such foreign corporation) beginning after December 31, 1962. (Id., § 9(e), 76 Stat. 1001. For the complete text of § 9(e), see "Applicability" under the amendment of Sec. 861(a)(2)(B), p. 395 above. SEC. 902. CREDIT FOR CORPORATE STOCKHOLDER IN FOREIGN CORPORATION (68A Stat. 286-287): (e). (added) Sept. 14, 1960, H.R. 10087, P.L. 86-780, § 6(b) (2), 74 Stat. 1016: Amended Sec. 902 267 by inserting after subsection (d) (special rules for certain wholly-owned foreign corporations) a new subsection (e), as follows: "(e) CROSS REFERENCE. "For reduction of credit with respect to dividends paid out of accumulated profits for years for which certain information is not furnished, see section 6038." 256 Subsection (d) of section 901 originally read as follows (68A Stat. 286): "(d) CROSS REFERENCE. “(1) For deductions of income, war profits, and excess profits taxes paid to a foreign country or a possession of the United States, see section 164. "(2) For right of each partner to make election under this section, see section 703(b). (3) For right of estate or trust to the credit for taxes imposed by foreign countries and possessions of the United States under this section, see section 642 (a) (2).” 367 Prior to the above amendment section 902 read as follows (68A Stat. 286-287): "SEC. 902. CREDIT FOR CORPORATE STOCKHOLDER IN FOREIGN CORPORATION. "(a) TREATMENT OF TAXES PAID BY FOREIGN CORPORATION.-For purposes of this subpart, a domestic corporation which owns at least 10 percent of the voting stock of a foreign corporation from which it receives dividends in any taxable year shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid or deemed to be paid by such foreign corporation to any foreign country or to any possession of the United States, on or with respect to [Footnote 267 continued on following page] SEC. 902-Continued (e) (added 1960)-Continued Applicability: In full.... Taxable years of domestic corporations beginning after December 31, 1960, with respect to information relating to a foreign corporation or a foreign subsidiary described in section 6038(a) (as added by P.L. 86-780, 6(a)) for its annual accounting periods beginning after December 31, 1960. (Id., § 6(c), 74 Stat. 1016.) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 9(a), 76 Stat. 999–1001: Amended Sec. 902 (as amended by P.L. 86-780, § 6(b)(2)) to read as follows: "SEC. 902. CREDIT FOR CORPORATE STOCKHOLDER IN FOREIGN CORPORATION. "(a) TREATMENT OF TAXES PAID BY FOREIGN CORPORATION.— For purposes of this subpart, a domestic corporation which owns at least 10 percent of the voting stock of a foreign corporation from which it receives dividends in any taxable year shall "(1) to the extent such dividends are paid by such foreign corporation out of accumulated profits (as defined in subsection (c)(1)(A)) of a year for which such foreign corporation is not a less developed country corporation, be deemed to have paid the same proportion of any income, war profits, or excess profits Footnote 267—Continued. the accumulated profits of such foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits. "(b) FOREIGN SUBSIDIARY OF FOREIGN CORPORATION.-If such foreign corporation owns 50 percent or more of the voting stock of another foreign corporation from which it receives dividends in any taxable year, it shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid by such other foreign corporation to any foreign country or to any possession of the United States, on or with respect to the accumulated profits of the corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits. "(c) APPLICABLE RULES. "(1) The term 'accumulated profits', when used in this section in reference to a foreign corporation, means the amount of its gains, profits, or income in excess of the income, war profits, and excess profits taxes imposed on or with respect to such profits or income; and the Secretary or his delegate shall have full power to determine from the accumulated profits of what year or years such dividends were paid, treating dividends paid in the first 60 days of any year as having been paid from the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. "(2) In the case of a foreign corporation, the income, war profits, and excess profits taxes of which are determined on the basis of an accounting period of less than 1 year, the word 'year' as used in this subsection shall be construed to mean such accounting period. "(d) SPECIAL RULES FOR CERTAIN WHOLLY-OWNED FOREIGN CORPORATIONS.-For purposes of this subtitle, if "(1) a domestic corporation owns, directly or indirectly, 100 percent of all classes of outstanding stock of a foreign corporation engaged in manufacturing, production, or mining, "(2) such domestic corporation receives property in the form of a royalty or compensation from such foreign corporation pursuant to any form of contractual arrangement under which the domestic corporation agrees to furnish services or property in consideration for the property so received, and "(3) such contractural arrangement provides that the property so received by such domestic corporation shall be accepted by such domestic corporation in lieu of dividends and that such foreign corporation shall neither declare nor pay any dividends of any kind in any calendar year in which such property is paid to such domestic corporation by such foreign corporation, then the excess of the fair market value of such property so received by such domestic corporation over the cost to such domestic corporation of the property and services so furnished by such domestic corporation shall be treated as a distribution by such foreign corporation to such domestic corporation, and for purposes of section 301, the amount of such distribution shall be such excess, in lieu of any amount otherwise determined under section 301 without regard to this subsection; and the basis of such property so received by such domestic corporation shall be the fair market value of such property, in lieu of the basis otherwise determined under sction 301 (d) without regard to this subsection." SEC. 902 (revised 1962)-Continued taxes paid or deemed to be paid by such foreign corporation to any foreign country or to any possession of the United States on or with respect to such accumulated profits, which the amount of such dividends (determined without regard to section 78) bears to the amount of such accumulated profits in excess of such income, war profits, and excess profits taxes (other than those deemed paid); and "(2) to the extent such dividends are paid by such foreign corporation out of accumulated profits (as defined in subsection (c)(1)(B)) of a year for which such foreign corporation is a less developed country corporation, be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid or deemed to be paid by such foreign corporation to any foreign country or to any possession of the United States on or with respect to such accumulated profits, which the amount of such dividends bears to the amount of such accumulated profits. "(b) FOREIGN SUBSIDIARY OF FOREIGN CORPORATION.-If such foreign corporation owns 50 percent or more of the voting stock of another foreign corporation from which it receives dividends in any taxable year, it shall be deemed to have paid the same proportion of any income, war profits, or excess profits taxes paid by such other foreign corporation to any foreign country or to any possession of the United States, on or with respect to the accumulated profits of the corporation from which such dividends were paid which— "(1) for purposes of applying subsection (a)(1), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(A)) of such other foreign corporation from which such dividends were paid in excess of such income, war profits, and excess profits taxes, or "(2) for purposes of applying subsection (a)(2), the amount of such dividends bears to the amount of the accumulated profits (as defined in subsection (c)(1)(B)) of such other foreign corporation from which dividends were paid. "(c) APPLICABLE RULES. "(1) ACCUMULATED PROFITS DEFINED. For purposes of this section, the term 'accumulated profits' means with respect to any foreign corporation— "(A) for purposes of subsections (a)(1) and (b)(1), the amount of its gains, profits, or income computed without reduction by the amount of the income, war profits, and excess profits taxes imposed on or with respect to such profits or income by any foreign country or any possession of the United States; and "(B) for purposes of subsections (a) (2) and (b)(2), the amount of its gains, profits, or income in excess of the income, war profits, and excess profits taxes imposed on or with respect to such profits or income. The Secretary or his delegate shall have full power to determine from the accumulated profits of what year or years such dividends were paid, treating dividends paid in the first 60 days of any year as having been paid from the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. "(2) ACCOUNTING PERIODS. In the case of a foreign corporation, the income, war profits, and excess profits taxes of which |