178
spect to any eligible article from any bene-
ficiary developing country if the aggregate
appraised value of the imports of such arti-
cle into the United States during the pre-
ceding calendar year does not exceed the ap-
plicable amount for such preceding calendar
year.
‘‘(ii) APPLICABLE AMOUNT.—For pur-
poses of applying clause (i), the applicable
amount is—
‘‘(I) for calendar year 1996,
$13,000,000, and
‘‘(II) for each calendar year there-
after, an amount equal to the applica-
ble amount in effect for the preceding
calendar year plus $500,000.
‘‘(d) WAIVER OF COMPETITIVE NEED LIMITATION.—
‘‘(1) IN GENERAL.—The President may waive the
application of subsection (c)(2) with respect to any el-
igible article of any beneficiary developing country if,
before July 1 of the calendar year beginning after the
calendar year for which a determination described in
subsection (c)(2)(A) was made with respect to such el-
igible article, the President—
179
‘‘(A) receives the advice of the International
Trade Commission under section 332 of the Tar-
iff Act of 1930 on whether any industry in the
United States is likely to be adversely affected by
such waiver,
‘‘(B) determines, based on the consider-
ations described in sections 501 and 502(c) and
the advice described in subparagraph (A), that
such waiver is in the national economic interest
of the United States, and
‘‘(C) publishes the determination described
in subparagraph (B) in the Federal Register.
‘‘(2) CONSIDERATIONS BY THE PRESIDENT.—In
making any determination under paragraph (1), the
President shall give great weight to—
‘‘(A) the extent to which the beneficiary de-
veloping country has assured the United States
that such country will provide equitable and rea-
sonable access to the markets and basic commod-
ity resources of such country, and
‘‘(B) the extent to which such country pro-
vides adequate and effective protection of intellec-
tual property rights.
‘‘(3) OTHER BASES FOR WAIVER.—The President
may waive the application of subsection (c)(2) if, be-
180
fore July 1 of the calendar year beginning after the
calendar year for which a determination described in
subsection (c)(2) was made with respect to a bene-
ficiary developing country, the President determines
that—
‘‘(A) there has been a historical preferential
trade relationship between the United States and
such country,
‘‘(B) there is a treaty or trade agreement in
force covering economic relations between such
country and the United States, and
‘‘(C) such country does not discriminate
against, or impose unjustifiable or unreasonable
barriers to, United States commerce,
and the President publishes that determination in the
Federal Register.
‘‘(4) LIMITATIONS ON WAIVERS.—
‘‘(A) IN GENERAL.—The President may not
exercise the waiver authority under this sub-
section with respect to a quantity of an eligible
article entered during any calendar year begin-
ning after 1995, the aggregate appraised value of
which equals or exceeds 30 percent of the aggre-
gate appraised value of all articles that entered
181
duty-free under this title during the preceding
calendar year.
‘‘(B) OTHER WAIVER LIMITS.—The Presi-
dent may not exercise the waiver authority pro-
vided under this subsection with respect to a
quantity of an eligible article entered during any
calendar year beginning after 1995, the aggre-
gate appraised value of which exceeds 15 percent
of the aggregate appraised value of all articles
that have entered duty-free under this title dur-
ing the preceding calendar year from those bene-
ficiary developing countries which for the preced-
ing calendar year—
‘‘(i) had a per capita gross national
product (calculated on the basis of the best
available information, including that of the
International Bank for Reconstruction and
Development) of $5,000 or more; or
‘‘(ii) had exported (either directly or
indirectly) to the United States a quantity
of articles that was duty-free under this title
that had an aggregate appraised value of
more than 10 percent of the aggregate ap-
praised value of all articles that entered
duty-free under this title during that year.
182
‘‘(C) CALCULATION OF LIMITATIONS.—There
shall be counted against the limitations imposed
under subparagraphs (A) and (B) for any cal-
endar year only that value of any eligible article
of any country that—
‘‘(i) entered duty-free under this title
during such calendar year; and
‘‘(ii) is in excess of the value of that
article that would have been so entered dur-
ing such calendar year if the limitations
under subsection (c)(2)(A) applied.
‘‘(5) EFFECTIVE
PERIOD
OF
WAIVER.—Any
waiver granted under this subsection shall remain in
effect until the President determines that such waiver
is no longer warranted due to changed circumstances.
‘‘(e) INTERNATIONAL TRADE COMMISSION ADVICE.—
Before designating articles as eligible articles under sub-
section (a)(1), the President shall publish and furnish the
International Trade Commission with lists of articles which
may be considered for designation as eligible articles for
purposes of this title. The provisions of sections 131, 132,
133, and 134 shall be complied with as though action under
section 501 and this section were action under section 123
to carry out a trade agreement entered into under section
123.
183
‘‘(f) SPECIAL RULE CONCERNING PUERTO RICO.—No
action under this title may affect any tariff duty imposed
by the Legislature of Puerto Rico pursuant to section 319
of the Tariff Act of 1930 on coffee imported into Puerto
Rico.
‘‘SEC. 504. REVIEW AND REPORT TO CONGRESS.
‘‘The President shall submit an annual report to the
Congress on the status of internationally recognized worker
rights within each beneficiary developing country.
‘‘SEC. 505. DATE OF TERMINATION.
‘‘No duty-free treatment provided under this title shall
remain in effect after May 12, 1997.
‘‘SEC. 506. AGRICULTURAL EXPORTS OF BENEFICIARY DE-
VELOPING COUNTRIES.
‘‘The appropriate agencies of the United States shall
assist beneficiary developing countries to develop and im-
plement measures designed to assure that the agricultural
sectors of their economies are not directed to export markets
to the detriment of the production of foodstuffs for their citi-
zenry.
‘‘SEC. 507. DEFINITIONS.
‘‘For purposes of this title:
‘‘(1) BENEFICIARY DEVELOPING COUNTRY.—The
term ‘beneficiary developing country’ means any
country with respect to which there is in effect an Ex-
184
ecutive order or Presidential proclamation by the
President designating such country as a beneficiary
developing country for purposes of this title.
‘‘(2) COUNTRY.—The term ‘country’ means any
foreign country or territory, including any overseas
dependent territory or possession of a foreign country,
or the Trust Territory of the Pacific Islands. In the
case of an association of countries which is a free
trade area or customs union, or which is contributing
to 
comprehensive 
regional 
economic 
integration
among its members through appropriate means, in-
cluding, but not limited to, the reduction of duties,
the President may by Executive order or Presidential
proclamation provide that all members of such asso-
ciation other than members which are barred from
designation under section 502(b) shall be treated as
one country for purposes of this title.
‘‘(3) ENTERED.—The term ‘entered’ means en-
tered, or withdrawn from warehouse for consumption,
in the customs territory of the United States.
‘‘(4) INTERNATIONALLY
RECOGNIZED
WORKER
RIGHTS.—The term ‘internationally recognized work-
er rights’ includes—
‘‘(A) the right of association;
185
‘‘(B) the right to organize and bargain col-
lectively;
‘‘(C) a prohibition on the use of any form
of forced or compulsory labor;
‘‘(D) a minimum age for the employment of
children; and
‘‘(E) acceptable conditions of work with re-
spect to minimum wages, hours of work, and oc-
cupational safety and health.
‘‘(5) LEAST-DEVELOPED BENEFICIARY DEVELOP-
ING COUNTRY.—The term ‘least-developed beneficiary
developing country’ means a beneficiary developing
country that is designated as a least-developed bene-
ficiary developing country under section 502(a)(2).’’.
(b) TABLE OF CONTENTS.—The items relating to title
V in the table of contents of the Trade Act of 1974 are
amended to read as follows:
‘‘TITLE V—GENERALIZED SYSTEM OF PREFERENCES
‘‘Sec. 501. Authority to extend preferences.
‘‘Sec. 502. Designation of beneficiary developing countries.
‘‘Sec. 503. Designation of eligible articles.
‘‘Sec. 504. Review and report to Congress.
‘‘Sec. 505. Date of termination.
‘‘Sec. 506. Agricultural exports of beneficiary developing countries.
‘‘Sec. 507. Definitions.’’.
SEC. 303. EFFECTIVE DATE.
(a) IN GENERAL.—The amendments made by this title
apply to articles entered on or after October 1, 1996.
(b) RETROACTIVE APPLICATION.—
186
(1) GENERAL
RULE.—Notwithstanding section
514 of the Tariff Act of 1930 or any other provision
of law and subject to subsection (c)—
(A) any article that was entered—
(i) after July 31, 1995, and
(ii) before January 1, 1996, and
to which duty-free treatment under title V of the
Trade Act of 1974 would have applied if the
entry had been made on July 31, 1995, shall be
liquidated or reliquidated as free of duty, and
the Secretary of the Treasury shall refund any
duty paid with respect to such entry, and
(B) any article that was entered—
(i) after December 31, 1995, and
(ii) before October 1, 1996, and
to which duty-free treatment under title V of the
Trade Act of 1974 (as amended by this title)
would have applied if the entry had been made
on or after October 1, 1996, shall be liquidated
or reliquidated as free of duty, and the Secretary
of the Treasury shall refund any duty paid with
respect to such entry.
(2) LIMITATION ON REFUNDS.—No refund shall
be made pursuant to this subsection before October 1,
1996.
187
(3) ENTRY.—As used in this subsection, the term
‘‘entry’’ includes a withdrawal from warehouse for
consumption.
(c) REQUESTS.—Liquidation or reliquidation may be
made under subsection (b) with respect to an entry only
if a request therefor is filed with the Customs Service, with-
in 180 days after the date of the enactment of this Act, that
contains sufficient information to enable the Customs Serv-
ice—
(1) to locate the entry; or
(2) to reconstruct the entry if it cannot be lo-
cated.
SEC. 304. CONFORMING AMENDMENTS.
(a) TRADE LAWS.—
(1) Section 1211(b) of the Omnibus Trade and
Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is
amended—
(A) in paragraph (1), by striking ‘‘(19
U.S.C. 2463(a), 2464(c)(3))’’ and inserting ‘‘(as
in effect on July 31, 1995)’’; and
(B) in paragraph (2), by striking ‘‘(19
U.S.C. 2464(c)(1))’’ and inserting the following:
‘‘(as in effect on July 31, 1995)’’.
188
(2) Section 203(c)(7) of the Andean Trade Pref-
erence Act (19 U.S.C. 3202(c)(7)) is amended by
striking ‘‘502(a)(4)’’ and inserting ‘‘507(4)’’.
(3) Section 212(b)(7) of the Caribbean Basin
Economic Recovery Act (19 U.S.C. 2702(b)(7)) is
amended by striking ‘‘502(a)(4)’’ and inserting
‘‘507(4)’’.
(4) General note 3(a)(iv)(C) of the Harmonized
Tariff Schedule of the United States is amended by
striking ‘‘sections 503(b) and 504(c)’’ and inserting
‘‘subsections (a), (c), and (d) of section 503’’.
(5) Section 201(a)(2) of the North American
Free Trade Agreement Implementation Act (19 U.S.C.
3331(a)(2)) is amended by striking ‘‘502(a)(2) of the
Trade Act of 1974 (19 U.S.C. 2462(a)(2))’’ and in-
serting ‘‘502(f)(2) of the Trade Act of 1974’’.
(6) Section 131 of the Uruguay Round Agree-
ments Act (19 U.S.C. 3551) is amended in subsections
(a) and (b)(1) by striking ‘‘502(a)(4)’’ and inserting
‘‘507(4)’’.
(b) OTHER LAWS.—
(1) Section 871(f)(2)(B) of the Internal Revenue
Code of 1986 is amended by striking ‘‘within the
meaning of section 502’’ and inserting ‘‘under title
V’’.
189
(2) Section 2202(8) of the Export Enhancement
Act of 1988 (15 U.S.C. 4711(8)) is amended by strik-
ing ‘‘502(a)(4)’’ and inserting ‘‘507(4)’’.
(3) Section 231A(a) of the Foreign Assistance
Act of 1961 (22 U.S.C. 2191a(a)) is amended—
(A) in paragraph (1) by striking ‘‘502(a)(4)
of the Trade Act of 1974 (19 U.S.C. 2462(a)(4))’’
and inserting ‘‘507(4) of the Trade Act of 1974’’;
(B) in paragraph (2) by striking ‘‘505(c) of
the Trade Act of 1974 (19 U.S.C. 2465(c))’’ and
inserting ‘‘504 of the Trade Act of 1974’’; and
(C) 
in 
paragraph 
(4) 
by 
striking
‘‘502(a)(4)’’ and inserting ‘‘507(4)’’.
(4) Section 1621(a)(1) of the International Fi-
nancial Institutions Act (22 U.S.C. 262p–4p(a)(1)) is
amended by striking ‘‘502(a)(4)’’ and inserting
‘‘507(4)’’.
(5) Section 103B of the Agricultural Act of 1949
(7 U.S.C. 1444–2) is amended in subsections
(a)(5)(F) (v) and (n)(1)(C) by striking ‘‘503(d) of the
Trade Act of 1974 (19 U.S.C. 2463(d))’’ and inserting
‘‘503(b)(3) of the Trade Act of 1974’’.
190
TITLE IV—REVENUE OFFSETS
SEC. 400. AMENDMENT OF 1986 CODE.
Except as otherwise expressly provided, whenever in
this title an amendment or repeal is expressed in terms of
an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
Subtitle A—Foreign Trust Tax
Compliance
SEC. 401. IMPROVED INFORMATION REPORTING ON FOR-
EIGN TRUSTS.
(a) IN GENERAL.—Section 6048 (relating to returns
as to certain foreign trusts) is amended to read as follows:
‘‘SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOR-
EIGN TRUSTS.
‘‘(a) NOTICE OF CERTAIN EVENTS.—
‘‘(1) GENERAL RULE.—On or before the 90th day
(or such later day as the Secretary may prescribe)
after any reportable event, the responsible party shall
provide written notice of such event to the Secretary
in accordance with paragraph (2).
‘‘(2) CONTENTS OF NOTICE.—The notice required
by paragraph (1) shall contain such information as
the Secretary may prescribe, including—
191
‘‘(A) the amount of money or other property
(if any) transferred to the trust in connection
with the reportable event, and
‘‘(B) the identity of the trust and of each
trustee and beneficiary (or class of beneficiaries)
of the trust.
‘‘(3) REPORTABLE EVENT.—For purposes of this
subsection—
‘‘(A) IN
GENERAL.—The term ‘reportable
event’ means—
‘‘(i) the creation of any foreign trust
by a United States person,
‘‘(ii) the transfer of any money or
property (directly or indirectly) to a foreign
trust by a United States person, including
a transfer by reason of death, and
‘‘(iii) the death of a citizen or resident
of the United States if—
‘‘(I) the decedent was treated as
the owner of any portion of a foreign
trust under the rules of subpart E of
part I of subchapter J of chapter 1, or
‘‘(II) any portion of a foreign
trust was included in the gross estate
of the decedent.
192
‘‘(B) EXCEPTIONS.—
‘‘(i) FAIR
MARKET
VALUE
SALES.—
Subparagraph (A)(ii) shall not apply to
any transfer of property to a trust in ex-
change for consideration of at least the fair
market value of the transferred property.
For purposes of the preceding sentence, con-
sideration other than cash shall be taken
into account at its fair market value and
the rules of section 679(a)(3) shall apply.
‘‘(ii) DEFERRED
COMPENSATION
AND
CHARITABLE
TRUSTS.—Subparagraph (A)
shall not apply with respect to a trust
which is—
‘‘(I) described in section 402(b),
404(a)(4), or 404A, or
‘‘(II) determined by the Secretary
to be described in section 501(c)(3).
‘‘(4) RESPONSIBLE PARTY.—For purposes of this
subsection, the term ‘responsible party’ means—
‘‘(A) the grantor in the case of the creation
of an inter vivos trust,
‘‘(B) the transferor in the case of a report-
able event described in paragraph (3)(A)(ii)
other than a transfer by reason of death, and
193
‘‘(C) the executor of the decedent’s estate in
any other case.
‘‘(b) UNITED STATES GRANTOR OF FOREIGN TRUST.—
‘‘(1) IN GENERAL.—If, at any time during any
taxable year of a United States person, such person
is treated as the owner of any portion of a foreign
trust under the rules of subpart E of part I of sub-
chapter J of chapter 1, such person shall be respon-
sible to ensure that—
‘‘(A) such trust makes a return for such
year which sets forth a full and complete ac-
counting of all trust activities and operations for
the year, the name of the United States agent for
such trust, and such other information as the
Secretary may prescribe, and
‘‘(B) such trust furnishes such information
as the Secretary may prescribe to each United
States person (i) who is treated as the owner of
any portion of such trust or (ii) who receives
(directly or indirectly) any distribution from the
trust.
‘‘(2) TRUSTS
NOT
HAVING
UNITED
STATES
AGENT.—
‘‘(A) IN
GENERAL.—If the rules of this
paragraph apply to any foreign trust, the deter-
194
mination of amounts required to be taken into
account with respect to such trust by a United
States person under the rules of subpart E of
part I of subchapter J of chapter 1 shall be de-
termined by the Secretary.
‘‘(B) UNITED STATES AGENT REQUIRED.—
The rules of this paragraph shall apply to any
foreign trust to which paragraph (1) applies un-
less such trust agrees (in such manner, subject to
such conditions, and at such time as the Sec-
retary shall prescribe) to authorize a United
States person to act as such trust’s limited agent
solely for purposes of applying sections 7602,
7603, and 7604 with respect to—
‘‘(i) any request by the Secretary to ex-
amine records or produce testimony related
to the proper treatment of amounts required
to be taken into account under the rules re-
ferred to in subparagraph (A), or
‘‘(ii) any summons by the Secretary
for such records or testimony.
The appearance of persons or production of
records by reason of a United States person
being such an agent shall not subject such per-
sons or records to legal process for any purpose
195
other than determining the correct treatment
under this title of the amounts required to be
taken into account under the rules referred to in
subparagraph (A). A foreign trust which ap-
points an agent described in this subparagraph
shall not be considered to have an office or a per-
manent establishment in the United States, or
to be engaged in a trade or business in the Unit-
ed States, solely because of the activities of such
agent pursuant to this subsection.
‘‘(C) OTHER RULES TO APPLY.—Rules simi-
lar to the rules of paragraphs (2) and (4) of sec-
tion 6038A(e) shall apply for purposes of this
paragraph.
‘‘(c) REPORTING BY UNITED STATES BENEFICIARIES
OF FOREIGN TRUSTS.—
‘‘(1) IN GENERAL.—If any United States person
receives (directly or indirectly) during any taxable
year of such person any distribution from a foreign
trust, such person shall make a return with respect to
such trust for such year which includes—
‘‘(A) the name of such trust,
‘‘(B) the aggregate amount of the distribu-
tions so received from such trust during such
taxable year, and
196
‘‘(C) such other information as the Sec-
retary may prescribe.
‘‘(2) INCLUSION
IN
INCOME
IF
RECORDS
NOT
PROVIDED.—
‘‘(A) IN GENERAL.—If adequate records are
not provided to the Secretary to determine the
proper treatment of any distribution from a for-
eign trust, such distribution shall be treated as
an accumulation distribution includible in the
gross income of the distributee under chapter 1.
To the extent provided in regulations, the preced-
ing sentence shall not apply if the foreign trust
elects to be subject to rules similar to the rules
of subsection (b)(2)(B).
‘‘(B) APPLICATION OF ACCUMULATION DIS-
TRIBUTION
RULES.—For purposes of applying
section 668 in a case to which subparagraph (A)
applies, the applicable number of years for pur-
poses of section 668(a) shall be 1⁄2 of the number
of years the trust has been in existence.
‘‘(d) SPECIAL RULES.—
‘‘(1) DETERMINATION
OF
WHETHER
UNITED
STATES PERSON MAKES TRANSFER OR RECEIVES DIS-
TRIBUTION.—For purposes of this section, in deter-
mining whether a United States person makes a
197
transfer to, or receives a distribution from, a foreign
trust, the fact that a portion of such trust is treated
as owned by another person under the rules of sub-
part E of part I of subchapter J of chapter 1 shall
be disregarded.
‘‘(2) DOMESTIC TRUSTS WITH FOREIGN ACTIVI-
TIES.—To the extent provided in regulations, a trust
which is a United States person shall be treated as
a foreign trust for purposes of this section and section
6677 if such trust has substantial activities, or holds
substantial property, outside the United States.
‘‘(3) TIME AND MANNER OF FILING INFORMA-
TION.—Any notice or return required under this sec-
tion shall be made at such time and in such manner
as the Secretary shall prescribe.
‘‘(4) 
MODIFICATION
OF
RETURN
REQUIRE-
MENTS.—The Secretary is authorized to suspend or
modify any requirement of this section if the Sec-
retary determines that the United States has no sig-
nificant tax interest in obtaining the required infor-
mation.’’.
(b) INCREASED PENALTIES.—Section 6677 (relating to
failure to file information returns with respect to certain
foreign trusts) is amended to read as follows:
198
‘‘SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT
TO CERTAIN FOREIGN TRUSTS.
‘‘(a) CIVIL PENALTY.—In addition to any criminal
penalty provided by law, if any notice or return required
to be filed by section 6048—
‘‘(1) is not filed on or before the time provided
in such section, or
‘‘(2) does not include all the information re-
quired pursuant to such section or includes incorrect
information,
the person required to file such notice or return shall pay
a penalty equal to 35 percent of the gross reportable
amount. If any failure described in the preceding sentence
continues for more than 90 days after the day on which
the Secretary mails notice of such failure to the person re-
quired to pay such penalty, such person shall pay a penalty
(in addition to the amount determined under the preceding
sentence) of $10,000 for each 30-day period (or fraction
thereof) during which such failure continues after the expi-
ration of such 90-day period. In no event shall the penalty
under this subsection with respect to any failure exceed the
gross reportable amount.
‘‘(b) SPECIAL RULES FOR RETURNS UNDER SECTION
6048(b).—In the case of a return required under section
6048(b)—
199
‘‘(1) the United States person referred to in such
section shall be liable for the penalty imposed by sub-
section (a), and
‘‘(2) subsection (a) shall be applied by substitut-
ing ‘5 percent’ for ‘35 percent’.
‘‘(c) GROSS REPORTABLE AMOUNT.—For purposes of
subsection (a), the term ‘gross reportable amount’ means—
‘‘(1) the gross value of the property involved in
the event (determined as of the date of the event) in
the case of a failure relating to section 6048(a),
‘‘(2) the gross value of the portion of the trust’s
assets at the close of the year treated as owned by the
United States person in the case of a failure relating
to section 6048(b)(1), and
‘‘(3) the gross amount of the distributions in the
case of a failure relating to section 6048(c).
‘‘(d) REASONABLE CAUSE EXCEPTION.—No penalty
shall be imposed by this section on any failure which is
shown to be due to reasonable cause and not due to willful
neglect. The fact that a foreign jurisdiction would impose
a civil or criminal penalty on the taxpayer (or any other
person) for disclosing the required information is not rea-
sonable cause.
‘‘(e) DEFICIENCY PROCEDURES NOT TO APPLY.—Sub-
chapter B of chapter 63 (relating to deficiency procedures
200
for income, estate, gift, and certain excise taxes) shall not
apply in respect of the assessment or collection of any pen-
alty imposed by subsection (a).’’.
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 6724(d) is amended
by striking ‘‘or’’ at the end of subparagraph (S), by
striking the period at the end of subparagraph (T)
and inserting ‘‘, or’’, and by inserting after subpara-
graph (T) the following new subparagraph:
‘‘(U) section 6048(b)(1)(B) (relating to for-
eign trust reporting requirements).’’.
(2) The table of sections for subpart B of part
III of subchapter A of chapter 61 is amended by strik-
ing the item relating to section 6048 and inserting
the following new item:
‘‘Sec. 6048. Information with respect to certain foreign trusts.’’.
(3) The table of sections for part I of subchapter
B of chapter 68 is amended by striking the item relat-
ing to section 6677 and inserting the following new
item:
‘‘Sec. 6677. Failure to file information with respect to certain for-
eign trusts.’’.
(d) EFFECTIVE DATES.—
(1) REPORTABLE EVENTS.—To the extent related
to subsection (a) of section 6048 of the Internal Reve-
nue Code of 1986, as amended by this section, the
201
amendments made by this section shall apply to re-
portable events (as defined in such section 6048) oc-
curring after the date of the enactment of this Act.
(2) GRANTOR TRUST REPORTING.—To the extent
related to subsection (b) of such section 6048, the
amendments made by this section shall apply to tax-
able years of United States persons beginning after
December 31, 1995.
(3) REPORTING
BY
UNITED
STATES
BENE-
FICIARIES.—To the extent related to subsection (c) of
such section 6048, the amendments made by this sec-
tion shall apply to distributions received after the
date of the enactment of this Act.
SEC. 402. COMPARABLE PENALTIES FOR FAILURE TO FILE
RETURN RELATING TO TRANSFERS TO FOR-
EIGN ENTITIES.
(a) IN GENERAL.—Section 1494 is amended by adding
at the end the following new subsection:
‘‘(c) PENALTY.—In the case of any failure to file a re-
turn required by the Secretary with respect to any transfer
described in section 1491, the person required to file such
return shall be liable for the penalties provided in section
6677 in the same manner as if such failure were a failure
to file a notice under section 6048(a).’’.
202
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to transfers after the date of the en-
actment of this Act.
SEC. 403. MODIFICATIONS OF RULES RELATING TO FOR-
EIGN TRUSTS HAVING ONE OR MORE UNITED
STATES BENEFICIARIES.
(a) TREATMENT OF TRUST OBLIGATIONS, ETC.—
(1) Paragraph (2) of section 679(a) is amended
by striking subparagraph (B) and inserting the fol-
lowing:
‘‘(B) 
TRANSFERS
AT
FAIR
MARKET
VALUE.—To any transfer of property to a trust
in exchange for consideration of at least the fair
market value of the transferred property. For
purposes of the preceding sentence, consideration
other than cash shall be taken into account at its
fair market value.’’.
(2) Subsection (a) of section 679 (relating to for-
eign trusts having one or more United States bene-
ficiaries) is amended by adding at the end the follow-
ing new paragraph:
‘‘(3) CERTAIN OBLIGATIONS NOT TAKEN INTO AC-
COUNT UNDER FAIR MARKET VALUE EXCEPTION.—
‘‘(A) IN GENERAL.—In determining whether
paragraph (2)(B) applies to any transfer by a
203
person described in clause (ii) or (iii) of sub-
paragraph (C), there shall not be taken into ac-
count—
‘‘(i) except as provided in regulations,
any obligation of a person described in sub-
paragraph (C), and
‘‘(ii) to the extent provided in regula-
tions, any obligation which is guaranteed
by a person described in subparagraph (C).
‘‘(B) TREATMENT OF PRINCIPAL PAYMENTS
ON
OBLIGATION.—Principal payments by the
trust on any obligation referred to in subpara-
graph (A) shall be taken into account on and
after the date of the payment in determining the
portion of the trust attributable to the property
transferred.
‘‘(C) PERSONS
DESCRIBED.—The persons
described in this subparagraph are—
‘‘(i) the trust,
‘‘(ii) any grantor or beneficiary of the
trust, and
‘‘(iii) any person who is related (with-
in the meaning of section 643(i)(2)(B)) to
any grantor or beneficiary of the trust.’’.
204
(b) EXEMPTION
OF
TRANSFERS
TO
CHARITABLE
TRUSTS.—Subsection (a) of section 679 is amended by
striking ‘‘section 404(a)(4) or 404A’’ and inserting ‘‘section
6048(a)(3)(B)(ii)’’.
(c) OTHER MODIFICATIONS.—Subsection (a) of section
679 is amended by adding at the end the following new
paragraphs:
‘‘(4) SPECIAL RULES APPLICABLE TO FOREIGN
GRANTOR WHO LATER BECOMES A UNITED STATES
PERSON.—
‘‘(A) IN GENERAL.—If a nonresident alien
individual has a residency starting date within
5 years after directly or indirectly transferring
property to a foreign trust, this section and sec-
tion 6048 shall be applied as if such individual
transferred to such trust on the residency start-
ing date an amount equal to the portion of such
trust attributable to the property transferred by
such individual to such trust in such transfer.
‘‘(B) TREATMENT
OF
UNDISTRIBUTED
IN-
COME.—For purposes of this section, undistrib-
uted net income for periods before such individ-
ual’s residency starting date shall be taken into
account in determining the portion of the trust
which is attributable to property transferred by
205
such individual to such trust but shall not other-
wise be taken into account.
‘‘(C) RESIDENCY
STARTING
DATE.—For
purposes of this paragraph, an individual’s resi-
dency starting date is the residency starting date
determined under section 7701(b)(2)(A).
‘‘(5) OUTBOUND TRUST MIGRATIONS.—If—
‘‘(A) an individual who is a citizen or resi-
dent of the United States transferred property to
a trust which was not a foreign trust, and
‘‘(B) such trust becomes a foreign trust
while such individual is alive,
then this section and section 6048 shall be applied as
if such individual transferred to such trust on the
date such trust becomes a foreign trust an amount
equal to the portion of such trust attributable to the
property previously transferred by such individual to
such trust. A rule similar to the rule of paragraph
(4)(B) shall apply for purposes of this paragraph.’’.
(d) MODIFICATIONS RELATING TO WHETHER TRUST
HAS UNITED STATES BENEFICIARIES.—Subsection (c) of
section 679 is amended by adding at the end the following
new paragraph:
‘‘(3) CERTAIN
UNITED
STATES
BENEFICIARIES
DISREGARDED.—A beneficiary shall not be treated as
206
a United States person in applying this section with
respect to any transfer of property to foreign trust if
such beneficiary first became a United States person
more than 5 years after the date of such transfer.’’.
(e) TECHNICAL AMENDMENT.—Subparagraph (A) of
section 679(c)(2) is amended to read as follows:
‘‘(A) in the case of a foreign corporation,
such corporation is a controlled foreign corpora-
tion (as defined in section 957(a)),’’.
(f) REGULATIONS.—Section 679 is amended by adding
at the end the following new subsection:
‘‘(d) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(g) EFFECTIVE DATE.—The amendments made by this
section shall apply to transfers of property after February
6, 1995.
SEC. 404. FOREIGN PERSONS NOT TO BE TREATED AS OWN-
ERS UNDER GRANTOR TRUST RULES.
(a) GENERAL RULE.—
(1) Subsection (f) of section 672 (relating to spe-
cial rule where grantor is foreign person) is amended
to read as follows:
‘‘(f) SUBPART NOT TO RESULT IN FOREIGN OWNER-
SHIP.—
207
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this subpart, this subpart shall apply
only to the extent such application results in an
amount (if any) being currently taken into account
(directly or through 1 or more entities) under this
chapter in computing the income of a citizen or resi-
dent of the United States or a domestic corporation.
‘‘(2) EXCEPTIONS.—
‘‘(A) CERTAIN
REVOCABLE
AND
IRREV-
OCABLE
TRUSTS.—Paragraph (1) shall not
apply to any portion of a trust if—
‘‘(i) the power to revest absolutely in
the grantor title to the trust property to
which such portion is attributable is exer-
cisable solely by the grantor without the ap-
proval or consent of any other person or
with the consent of a related or subordinate
party who is subservient to the grantor, or
‘‘(ii) the only amounts distributable
from such portion (whether income or cor-
pus) during the lifetime of the grantor are
amounts distributable to the grantor or the
spouse of the grantor.
‘‘(B) COMPENSATORY
TRUSTS.—Except as
provided in regulations, paragraph (1) shall not
208
apply to any portion of a trust distributions
from which are taxable as compensation for serv-
ices rendered.
‘‘(3) SPECIAL RULES.—Except as otherwise pro-
vided in regulations prescribed by the Secretary—
‘‘(A) a controlled foreign corporation (as de-
fined in section 957) shall be treated as a domes-
tic corporation for purposes of paragraph (1),
and
‘‘(B) paragraph (1) shall not apply for pur-
poses of applying section 1296.
‘‘(4) 
RECHARACTERIZATION
OF
PURPORTED
GIFTS.—In the case of any transfer directly or indi-
rectly from a partnership or foreign corporation
which the transferee treats as a gift or bequest, the
Secretary may recharacterize such transfer in such
circumstances as the Secretary determines to be ap-
propriate to prevent the avoidance of the purposes of
this subsection.
‘‘(5) SPECIAL RULE WHERE GRANTOR IS FOR-
EIGN PERSON.—If—
‘‘(A) but for this subsection, a foreign per-
son would be treated as the owner of any portion
of a trust, and
209
‘‘(B) such trust has a beneficiary who is a
United States person,
such beneficiary shall be treated as the grantor of
such portion to the extent such beneficiary or any
member of such beneficiary’s family (within the
meaning of section 267(c)(4)) has made (directly or
indirectly) transfers of property (other than in a sale
for full and adequate consideration) to such foreign
person. For purposes of the preceding sentence, any
gift shall not be taken into account to the extent such
gift would be excluded from taxable gifts under section
2503(b).
‘‘(6) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or appro-
priate to carry out the purposes of this subsection, in-
cluding regulations providing that paragraph (1)
shall not apply in appropriate cases.’’.
(2) The last sentence of subsection (c) of section
672 of such Code is amended by inserting ‘‘subsection
(f) and’’ before ‘‘sections 674’’.
(b) CREDIT FOR CERTAIN TAXES.—
(1) Paragraph (2) of section 665(d) is amended
by adding at the end the following new sentence:
‘‘Under rules or regulations prescribed by the Sec-
retary, in the case of any foreign trust of which the
210
settlor or another person would be treated as owner
of any portion of the trust under subpart E but for
section 672(f), the term ‘taxes imposed on the trust’
includes the allocable amount of any income, war
profits, and excess profits taxes imposed by any for-
eign country or possession of the United States on the
settlor or such other person in respect of trust in-
come.’’.
(2) Paragraph (5) of section 901(b) is amended
by adding at the end the following new sentence:
‘‘Under rules or regulations prescribed by the Sec-
retary, in the case of any foreign trust of which the
settlor or another person would be treated as owner
of any portion of the trust under subpart E but for
section 672(f), the allocable amount of any income,
war profits, and excess profits taxes imposed by any
foreign country or possession of the United States on
the settlor or such other person in respect of trust in-
come.’’.
(c) DISTRIBUTIONS
BY CERTAIN FOREIGN TRUSTS
THROUGH NOMINEES.—
(1) Section 643 is amended by adding at the end
the following new subsection:
‘‘(h) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS
THROUGH NOMINEES.—For purposes of this part, any
211
amount paid to a United States person which is derived
directly or indirectly from a foreign trust of which the
payor is not the grantor shall be deemed in the year of pay-
ment to have been directly paid by the foreign trust to such
United States person.’’.
(2) Section 665 is amended by striking sub-
section (c).
(d) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided by para-
graph (2), the amendments made by this section shall
take effect on the date of the enactment of this Act.
(2) EXCEPTION
FOR
CERTAIN
TRUSTS.—The
amendments made by this section shall not apply to
any trust—
(A) which is treated as owned by the grant-
or under section 676 or 677 (other than sub-
section (a)(3) thereof) of the Internal Revenue
Code of 1986, and
(B) which is in existence on September 19,
1995.
The preceding sentence shall not apply to the portion
of any such trust attributable to any transfer to such
trust after September 19, 1995.
(e) TRANSITIONAL RULE.—If—
212
(1) by reason of the amendments made by this
section, any person other than a United States person
ceases to be treated as the owner of a portion of a do-
mestic trust, and
(2) before January 1, 1997, such trust becomes
a foreign trust, or the assets of such trust are trans-
ferred to a foreign trust,
no tax shall be imposed by section 1491 of the Internal Rev-
enue Code of 1986 by reason of such trust becoming a for-
eign trust or the assets of such trust being transferred to
a foreign trust.
SEC. 405. INFORMATION REPORTING REGARDING FOREIGN
GIFTS.
(a) IN GENERAL.—Subpart A of part III of subchapter
A of chapter 61 is amended by inserting after section 6039E
the following new section:
‘‘SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM
FOREIGN PERSONS.
‘‘(a) IN GENERAL.—If the value of the aggregate for-
eign gifts received by a United States person (other than
an organization described in section 501(c) and exempt
from tax under section 501(a)) during any taxable year ex-
ceeds $10,000, such United States person shall furnish (at
such time and in such manner as the Secretary shall pre-
213
scribe) such information as the Secretary may prescribe re-
garding each foreign gift received during such year.
‘‘(b) FOREIGN GIFT.—For purposes of this section, the
term ‘foreign gift’ means any amount received from a per-
son other than a United States person which the recipient
treats as a gift or bequest. Such term shall not include any
qualified 
transfer 
(within 
the 
meaning 
of 
section
2503(e)(2)) or any distribution properly disclosed in a re-
turn under section 6048(c).
‘‘(c) PENALTY FOR FAILURE TO FILE INFORMATION.—
‘‘(1) IN GENERAL.—If a United States person
fails to furnish the information required by subsection
(a) with respect to any foreign gift within the time
prescribed therefor (including extensions)—
‘‘(A) the tax consequences of the receipt of
such gift shall be determined by the Secretary,
and
‘‘(B) such United States person shall pay
(upon notice and demand by the Secretary and
in the same manner as tax) an amount equal to
5 percent of the amount of such foreign gift for
each month for which the failure continues (not
to exceed 25 percent of such amount in the aggre-
gate).
214
‘‘(2) REASONABLE
CAUSE
EXCEPTION.—Para-
graph (1) shall not apply to any failure to report a
foreign gift if the United States person shows that the
failure is due to reasonable cause and not due to will-
ful neglect.
‘‘(d) COST-OF-LIVING ADJUSTMENT.—In the case of
any taxable year beginning after December 31, 1996, the
$10,000 amount under subsection (a) shall be increased by
an amount equal to the product of such amount and the
cost-of-living adjustment for such taxable year under section
1(f)(3), except that subparagraph (B) thereof shall be ap-
plied by substituting ‘1995’ for ‘1992’.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be necessary or appropriate to
carry out the purposes of this section.’’.
(b) CLERICAL AMENDMENT.—The table of sections for
such subpart is amended by inserting after the item relating
to section 6039E the following new item:
‘‘Sec. 6039F. Notice of large gifts received from foreign persons.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to amounts received after the date of
the enactment of this Act in taxable years ending after such
date.
215
SEC. 406. MODIFICATION OF RULES RELATING TO FOREIGN
TRUSTS WHICH ARE NOT GRANTOR TRUSTS.
(a) MODIFICATION OF INTEREST CHARGE ON ACCUMU-
LATION DISTRIBUTIONS.—Subsection (a) of section 668 (re-
lating to interest charge on accumulation distributions from
foreign trusts) is amended to read as follows:
‘‘(a) GENERAL RULE.—For purposes of the tax deter-
mined under section 667(a)—
‘‘(1) INTEREST DETERMINED USING UNDERPAY-
MENT RATES.—The interest charge determined under
this section with respect to any distribution is the
amount of interest which would be determined on the
partial tax computed under section 667(b) for the pe-
riod described in paragraph (2) using the rates and
the method under section 6621 applicable to under-
payments of tax.
‘‘(2) PERIOD.—For purposes of paragraph (1),
the period described in this paragraph is the period
which begins on the date which is the applicable num-
ber of years before the date of the distribution and
which ends on the date of the distribution.
‘‘(3) APPLICABLE NUMBER OF YEARS.—For pur-
poses of paragraph (2)—
‘‘(A) IN GENERAL.—The applicable number
of years with respect to a distribution is the
number determined by dividing—
216
‘‘(i) the sum of the products described
in subparagraph (B) with respect to each
undistributed income year, by
‘‘(ii) the aggregate undistributed net
income.
The quotient determined under the preceding
sentence shall be rounded under procedures pre-
scribed by the Secretary.
‘‘(B) PRODUCT DESCRIBED.—For purposes
of subparagraph (A), the product described in
this subparagraph with respect to any undistrib-
uted income year is the product of—
‘‘(i) the undistributed net income for
such year, and
‘‘(ii) the sum of the number of taxable
years between such year and the taxable
year of the distribution (counting in each
case the undistributed income year but not
counting the taxable year of the distribu-
tion).
‘‘(4) UNDISTRIBUTED INCOME YEAR.—For pur-
poses of this subsection, the term ‘undistributed in-
come year’ means any prior taxable year of the trust
for which there is undistributed net income, other
than a taxable year during all of which the bene-
217
ficiary receiving the distribution was not a citizen or
resident of the United States.
‘‘(5) DETERMINATION OF UNDISTRIBUTED NET
INCOME.—Notwithstanding section 666, for purposes
of this subsection, an accumulation distribution from
the trust shall be treated as reducing proportionately
the undistributed net income for undistributed income
years.
‘‘(6) PERIODS
BEFORE
1996.—Interest for the
portion of the period described in paragraph (2)
which occurs before January 1, 1996, shall be deter-
mined—
‘‘(A) by using an interest rate of 6 percent,
and
‘‘(B) without compounding until January
1, 1996.’’.
(b) ABUSIVE
TRANSACTIONS.—Section 643(a) is
amended by inserting after paragraph (6) the following new
paragraph:
‘‘(7) ABUSIVE
TRANSACTIONS.—The Secretary
shall prescribe such regulations as may be necessary
or appropriate to carry out the purposes of this part,
including regulations to prevent avoidance of such
purposes.’’.
(c) TREATMENT OF LOANS FROM TRUSTS.—
218
(1) IN GENERAL.—Section 643 (relating to defi-
nitions applicable to subparts A, B, C, and D) is
amended by adding at the end the following new sub-
section:
‘‘(i) LOANS FROM FOREIGN TRUSTS.—For purposes of
subparts B, C, and D—
‘‘(1) GENERAL
RULE.—Except as provided in
regulations, if a foreign trust makes a loan of cash or
marketable securities directly or indirectly to—
‘‘(A) any grantor or beneficiary of such
trust who is a United States person, or
‘‘(B) any United States person not de-
scribed in subparagraph (A) who is related to
such grantor or beneficiary,
the amount of such loan shall be treated as a distribu-
tion by such trust to such grantor or beneficiary (as
the case may be).
‘‘(2) DEFINITIONS
AND
SPECIAL
RULES.—For
purposes of this subsection—
‘‘(A) CASH.—The term ‘cash’ includes for-
eign currencies and cash equivalents.
‘‘(B) RELATED PERSON.—
‘‘(i) IN GENERAL.—A person is related
to another person if the relationship between
such persons would result in a disallowance
219
of losses under section 267 or 707(b). In ap-
plying section 267 for purposes of the pre-
ceding sentence, section 267(c)(4) shall be
applied as if the family of an individual
includes the spouses of the members of the
family.
‘‘(ii) ALLOCATION.—If any person de-
scribed in paragraph (1)(B) is related to
more than one person, the grantor or bene-
ficiary to whom the treatment under this
subsection applies shall be determined under
regulations prescribed by the Secretary.
‘‘(C) EXCLUSION
OF
TAX-EXEMPTS.—The
term ‘United States person’ does not include any
entity exempt from tax under this chapter.
‘‘(D) TRUST
NOT
TREATED
AS
SIMPLE
TRUST.—Any trust which is treated under this
subsection as making a distribution shall be
treated as not described in section 651.
‘‘(3) SUBSEQUENT
TRANSACTIONS
REGARDING
LOAN PRINCIPAL.—If any loan is taken into account
under paragraph (1), any subsequent transaction be-
tween the trust and the original borrower regarding
the principal of the loan (by way of complete or par-
tial repayment, satisfaction, cancellation, discharge,
220
or otherwise) shall be disregarded for purposes of this
title.’’.
(2) TECHNICAL AMENDMENT.—Paragraph (8) of
section 7872(f) is amended by inserting ‘‘, 643(i),’’ be-
fore ‘‘or 1274’’ each place it appears.
(d) EFFECTIVE DATES.—
(1) INTEREST CHARGE.—The amendment made
by subsection (a) shall apply to distributions after the
date of the enactment of this Act.
(2) ABUSIVE
TRANSACTIONS.—The amendment
made by subsection (b) shall take effect on the date of
the enactment of this Act.
(3) LOANS
FROM
TRUSTS.—The amendment
made by subsection (c) shall apply to loans of cash
or marketable securities made after September 19,
1995.
SEC. 407. RESIDENCE OF TRUSTS, ETC.
(a) TREATMENT AS UNITED STATES PERSON.—
(1) IN
GENERAL.—Paragraph (30) of section
7701(a) is amended by striking ‘‘and’’ at the end of
subparagraph (C) and by striking subparagraph (D)
and by inserting the following new subparagraphs:
‘‘(D) any estate (other than a foreign estate,
within the meaning of paragraph (31)), and
‘‘(E) any trust if—
221
‘‘(i) a court within the United States
is able to exercise primary supervision over
the administration of the trust, and
‘‘(ii) one or more United States fidu-
ciaries have the authority to control all sub-
stantial decisions of the trust.’’.
(2) CONFORMING AMENDMENT.—Paragraph (31)
of section 7701(a) is amended to read as follows:
‘‘(31) FOREIGN ESTATE OR TRUST.—
‘‘(A) FOREIGN ESTATE.—The term ‘foreign
estate’ means an estate the income of which, from
sources without the United States which is not
effectively connected with the conduct of a trade
or business within the United States, is not in-
cludible in gross income under subtitle A.
‘‘(B) FOREIGN TRUST.—The term ‘foreign
trust’ means any trust other than a trust de-
scribed in subparagraph (E) of paragraph
(30).’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply—
(A) to taxable years beginning after Decem-
ber 31, 1996, or
222
(B) at the election of the trustee of a trust,
to taxable years ending after the date of the en-
actment of this Act.
Such an election, once made, shall be irrevocable.
(b) DOMESTIC TRUSTS WHICH BECOME FOREIGN
TRUSTS.—
(1) IN GENERAL.—Section 1491 (relating to im-
position of tax on transfers to avoid income tax) is
amended by adding at the end the following new flush
sentence:
‘‘If a trust which is not a foreign trust becomes a foreign
trust, such trust shall be treated for purposes of this section
as having transferred, immediately before becoming a for-
eign trust, all of its assets to a foreign trust.’’.
(2) EFFECTIVE DATE.—The amendment made by
this subsection shall take effect on the date of the en-
actment of this Act.
Subtitle B—International Shipping
Income Disclosure
SEC. 411. PENALTIES FOR FAILURE TO DISCLOSE POSITION
THAT CERTAIN INTERNATIONAL SHIPPING
INCOME IS NOT INCLUDIBLE IN GROSS IN-
COME.
(a) IN GENERAL.—Section 883 is amended by adding
at the end the following new subsection:
223
‘‘(d) PENALTIES FOR FAILURE TO DISCLOSE POSITION
THAT CERTAIN INTERNATIONAL SHIPPING INCOME IS NOT
INCLUDIBLE IN GROSS INCOME.—
‘‘(1) IN GENERAL.—A taxpayer who, with re-
spect to any tax imposed by this title, takes the posi-
tion that any of its gross income derived from the
international operation of a ship or ships is not in-
cludible in gross income by reason of subsection (a)(1)
or section 872(b)(1) (or by reason of any applicable
treaty) shall be entitled to such treatment only if such
position is disclosed (in such manner as the Secretary
may prescribe) on the return of tax for such tax (or
any statement attached to such return).
‘‘(2) ADDITIONAL
PENALTIES
FOR
FAILING
TO
DISCLOSE POSITION.—If a taxpayer fails to meet the
requirement of paragraph (1) with respect to any tax-
able year—
‘‘(A) the amount of the income from the
international operation of a ship or ships—
‘‘(i) which is from sources without the
United States, and
‘‘(ii) which is attributable to a fixed
place of business in the United States,
224
shall be treated for purposes of this title as effec-
tively connected with the conduct of a trade or
business within the United States, and
‘‘(B) no deductions or credits shall be al-
lowed which are attributable to income from the
international operation of a ship or ships.
‘‘(3) REASONABLE
CAUSE
EXCEPTION.—This
subsection shall not apply to a failure to disclose a
position if it is shown that such failure is due to rea-
sonable cause and not due to willful neglect.’’
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (1) of section 872(b) is amended
by striking ‘‘Gross income’’ and inserting ‘‘Except as
provided in section 883(d), gross income’’.
(2) Paragraph (1) of section 883(a) is amended
by striking ‘‘Gross income’’ and inserting ‘‘Except as
provided in subsection (d), gross income’’.
(c) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to taxable years beginning
after the later of—
(A) December 31, 1996, or
(B) the date that the Shipbuilding Agree-
ment enters into force with respect to the United
States.
225
(2) 
COORDINATION
WITH
TREATIES.—The
amendments made by this section shall not apply in
any case where their application would be contrary
to any treaty obligation of the United States.
(d) INFORMATION TO BE PROVIDED
BY CUSTOMS
SERVICE.—The United States Custom Service shall provide
the Secretary of the Treasury or his delegate with such in-
formation as may be specified by such Secretary in order
to enable such Secretary to determine whether ships which
are not registered in the United States are engaged in
transportation to or from the United States.
Amend the title so as to read: ‘‘An Act to amend the
United States-Israel Free Trade Area Implementation
Act of 1985 to provide the President with additional
proclamation authority with respect to articles of the
West Bank or Gaza Strip or a qualifying industrial zone,
to approve and implement the OECD Shipbuilding
Agreement, to reauthorize the Generalized System of
Preferences, and for other purposes.’’.