FOREIGN CORPORATIONS NOT AVAILED OF TO REDUCE TAXES.

SEC. 909. FOREIGN CORPORATIONS NOT AVAILED OF TO REDUCE TAXES. (a) Exclusion From Foreign Base Company Income.—Section 954(b)(4) (relating to exception for foreign corporations not availed of to reduce taxes) is amended to read as follows: “(4) Exception for foreign corporations not availed of to reduce taxes.—For purposes of subsection (a), foreign base company income does not include any item of income received by a controlled foreign corporation if it is established to the satisfaction of the Secretary or his delegate that neither— “(A) the creation or organization of such controlled foreign corporation under the laws of the foreign country in which it is incorporated (or, in the case of a controlled foreign corporation which is an acquired corporation, the acquisition of such corporation created or organized under the laws of the foreign country in which it is incorporated), nor “(B) the effecting of the transaction giving rise to such income through the controlled foreign corporation, has as one of its significant purposes a substantial reduction of income, war profits, or excess profits or similar taxes.” (b) Effective Date.—The amendment made by subsection (a) shall apply to taxable years ending after October 9, 1969.