CERTAIN DISTRIBUTIONS TO FOREIGN CORPORATIONS.

SEC. 312. CERTAIN DISTRIBUTIONS TO FOREIGN CORPORATIONS. (a) In 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 distributes—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 distributes—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.