THIRD TIER FOREIGN TAX CREDIT WHEN SECTION 951 APPLIES.

SEC. 1037. THIRD TIER FOREIGN TAX CREDIT WHEN SECTION 951 APPLIES. (a) Foreign Taxes Deemed Paid by Foreign Corporations.— Section 960(a)(1) (relating to special rules for foreign tax credits), as amended hr section 1033, is further amended to read as follows: “(1) General rule.— For purposes of subpart A of this part, if there is included, under section 951(a), bi the gross income of a domestic corporation any amount attributable to earnings and profits— “(A) of a foreign corporation (hereafter in this subsection referred to as the ‘first foreign corporation’) at least 10 per-90 STAT. 1634cent of the voting stock of which is owned by such domestic corporation, or “(B) of a second foreign corporation (hereinafter in this subsection referred to as the second foreign corporation’) at least 10 percent of the voting stock of which is owned by the first foreign corporation, or “(C) of a third foreign corporation (hereinafter in this subsection referred to as the ‘third foreign corporation’) at least 10 percent of the voting stock of which is owned by the second foreign corporation, then, under regulations prescribed by the Secretary, such domestic corporation shall be deemed to have paid the same proportion of the total income, war profits, and excess profits taxes paid (or deemed paid) by such foreign corporation to a foreign country or possession of the United States for the taxable year on or with respect to the earnings and profits of such foreign corporation which the amount of earnings and profits of such foreign corporation so included in gross income of the domestic corporation bears to the entire amount of the earnings and profits of such corporation for such taxable year. This paragraph shall not apply with respect to any amount included in the gross income of such domestic corporation attributable to earnings and profits of the second foreign corporation or of the third foreign corporation unless, in the case of the second foreign corporation, the percentage-of-voting-stock requirement of section 002(b)(3)(A) is satisfied, and in the case of the third foreign corporation, the percentage-of-voting-stock requirement of section 902(b)(3)(B) is satisfied.” (b) Effective Date.— The amendment made by this section shall apply with respect to earnings and profits of a foreign corporation included, under section 951(a) of the Internal Revenue Code of 1954, in the gross income of a domestic corporation in taxable years beginning after December 31, 1976.