modification of affiliation rules for purposes of rules allocating interest expense

modification of affiliation rules for purposes of rules allocating interest expenseSec. 216. (a) In General.—Subparagraph (A) of section 864(e)(5) of the Internal Revenue Code of 1986 is amended by adding at the end the following: “Notwithstanding the preceding sentence, a foreign corporation shall be treated as a member of the affiliated group if—“(i) more than 50 percent of the gross income of such foreign corporation for the taxable year is effectively connected with the conduct of a trade or business within the United States, and“(ii) at least 80 percent of either the vote or value of all outstanding stock of such foreign corporation is owned directly or indirectly by members of the affiliated group (determined with regard to this sentence).”.(b) Effective Date.—The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.