116
‘‘(I) only related person insur-
ance income were taken into account,
‘‘(II) stock owned (within the
meaning of section 958(a)) by United
States shareholders on the last day of
the taxable year were the only stock
in the foreign corporation, and
‘‘(III) only distributions received
by United States shareholders were
taken into account under subpara-
graph (B) of such paragraph (2), or
‘‘(ii) the amount which would be de-
termined under paragraph (2) of section
951(a) on the basis of the entire subpart
F income of the foreign corporation for the
taxable year.
‘‘(B) COORDINATION WITH OTHER PROVI-
SIONS.—The Secretary shall prescribe regula-
tions providing for such modifications to the
provisions of this subpart as may be necessary
or appropriate by reason of subparagraph (A).
‘‘(6) RELATED PERSON.—For purposes of this
subsection—
117
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the term ‘related person’ has
the meaning given such term by section 964(a).
‘‘(B) TREATMENT OF CERTAIN LIABILITY
INSURANCE POLICIES.—In the case of any pol-
icy of insurance covering liability arising from
services performed as a director, officer, or em-
ployee of a corporation or as a partner or em-
ployee of a partnership, the person performing
such services and the entity for which such
services are performed shall be treated as relat-
ed persons.
‘‘(7) COORDINATION WITH SECTION 1248.—For
purposes of section 1248, if any person is (or would
be but for paragraph (3)) treated under paragraph
(1) as a United States shareholder with respect to
any foreign corporation which would be taxed under
subchapter L if it were a domestic corporation and
which is (or would be but for paragraph (3)) treated
under paragraph (1) as a controlled foreign corpora-
tion—
‘‘(A) such person shall be treated as meet-
ing the stock ownership requirements of section
1248(a)(2) with respect to such foreign cor-
poration, and
118
‘‘(B) such foreign corporation shall be
treated as a controlled foreign corporation.
‘‘(8) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection, including—
‘‘(A) regulations preventing the avoidance
of this subsection through cross insurance ar-
rangements or otherwise, and
‘‘(B) regulations which may provide that a
person will not be treated as a United States
shareholder under paragraph (1) with respect
to any foreign corporation if neither such per-
son (nor any related person to such person) is
(directly or indirectly) insured under any policy
of insurance or reinsurance issued by such for-
eign corporation.
‘‘(b) ELECTION BY FOREIGN INSURANCE COMPANY
TO BE TREATED AS DOMESTIC CORPORATION.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a foreign corporation is a controlled
foreign corporation (as defined in section
957(a) by substituting ‘25 percent or more’ for
‘more than 50 percent’ and by using the defini-
tion of United States shareholder under sub-
section (a)(1)(A)),
119
‘‘(B) such foreign corporation would qual-
ify under part I or II of subchapter L for the
taxable year if it were a domestic corporation,
‘‘(C) such foreign corporation meets such
requirements as the Secretary shall prescribe to
ensure that the taxes imposed by this chapter
on such foreign corporation are paid, and
‘‘(D) such foreign corporation makes an
election to have this paragraph apply and
waives all benefits to such corporation granted
by the United States under any treaty,
for purposes of this title, such corporation shall be
treated as a domestic corporation.
‘‘(2) PERIOD DURING WHICH ELECTION IS IN
EFFECT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an election under paragraph
(1) shall apply to the taxable year for which
made and all subsequent taxable years unless
revoked with the consent of the Secretary.
‘‘(B) TERMINATION.—If a corporation
which made an election under paragraph (1) for
any taxable year fails to meet the requirements
of subparagraphs (A), (B), and (C), of para-
graph (1) for any subsequent taxable year, such