among and increase the income categories in
proportion to the loss from sources within the
United States previously allocated to those in-
come categories.
‘‘(B) INCOME CATEGORY.—For purposes of
this paragraph, the term ‘income category’ has
the meaning given to such term by subsection
(f)(5)(E)(i).
‘‘(4) COORDINATION WITH SUBSECTION (f).—
The Secretary shall prescribe such regulations as
may be necessary to coordinate the provisions of this
subsection with the provisions of subsection (f).’’
(b) CONFORMING AMENDMENT.—Subparagraph (A)
of section 936(a)(2) is amended by striking ‘‘section
904(f)’’ and inserting ‘‘subsections (f) and (g) of section
904’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to losses for taxable years begin-
ning after December 31, 1998.
SEC. 203. SPECIAL RULES RELATING TO FINANCIAL SERV-
ICES INCOME.
(a) EXCEPTION FOR INTEREST ON CERTAIN SECURI-
TIES.—Subparagraph (B) of section 904(d)(2) (relating to
high withholding tax interest) is amended by redesignating
clause (iii) as clause (iv) and by inserting after clause (ii)
the following new clause:
‘‘(iii) EXCEPTION FOR INTEREST ON
DEALER PROPERTY.—The term ‘high with-
holding tax interest’ shall not include any
interest on a security (within the meaning
of section 475(c)(2)) which is received or
accrued by a person that holds the security
in connection with the holder’s activities as
a dealer in securities (within the meaning
of section 475(c)(1)).’’
(b) FINANCIAL SERVICES INCOME IN EXCESS OF 80
PERCENT OF GROSS INCOME.—Subparagraph (C) of sec-
tion 904(d)(2) (relating to financial services income) is
amended by adding at the end the following new clause:
‘‘(iv) INCOME EXCEEDING 80 PERCENT
OF GROSS INCOME.—If the financial serv-
ices income (as defined by clause (i)) of
any person exceeds 80 percent of gross in-
come, the entire gross income for the tax-
able year shall be treated as financial serv-
ices income.’’
(c) EXCEPTION
FOR INCOME
ON DEALER PROP-
ERTY.—Subsection 904(g) is amended by redesignating
paragraph (11) as paragraph (12) and by adding after
paragraph (10) the following new paragraph:
‘‘(11) EXCEPTION
FOR
INCOME
ON
DEALER
PROPERTY.—Paragraph (1) shall not apply to any
amount derived from a United States-owned foreign
corporation that is derived from income on a secu-
rity (within the meaning of section 475(c)(2)) which
is received or accrued by a person that holds the se-
curity in connection with the holder’s activities as a
dealer in securities (within the meaning of section
475(c)(1)).’’
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply to taxable years beginning
after December 31, 1998.
(2) DEEMED PAID CREDITS.—In the case of
any credit under section 901 of the Internal Revenue
Code of 1986 by reason of section 902 or 960 of
such Code, the amendments made by this section
shall apply to taxable years of foreign corporations
beginning after December 31, 1998, and to taxable
years of United States shareholders in such corpora-
tions with or within which such taxable years of for-
eign corporations end.
SEC. 204. FOREIGN TAX CREDIT TREATMENT OF DIVI-
DENDS FROM NONCONTROLLED SECTION 902
CORPORATIONS.
(a) LOOK-THRU RULES TO APPLY TO DIVIDENDS
ATTRIBUTABLE
TO
POST-1998 
EARNINGS.—Section
904(d)(4)(B)(ii) (defining applicable dividend) is amended
by striking ‘‘2002’’ and inserting ‘‘1998’’.
(b) SEPARATE BASKET ONLY TO APPLY TO PRE-
1999 EARNINGS.—Each of the following provisions are
amended by striking ‘‘2003’’ and inserting ‘‘1999’’:
(1) Section 904(d)(1)(E).
(2) Section 904(d)(2)(C)(iii)(II).
(3) Section 904(d)(2)(D).
(c) COORDINATION WITH TAXPAYER RELIEF ACT.—
Section 1105(c) of the Taxpayer Relief Act of 1997 is
amended by striking ‘‘2002’’ and inserting ‘‘1998’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 205. APPLICATION OF LOOK-THRU RULES TO FOREIGN
TAX CREDIT.
(a) INTEREST, RENTS, AND ROYALTIES.—
(1) NONCONTROLLED
SECTION
902
CORPORA-
TION.—Section 904(d)(4)(A) is amended to read as
follows:
‘‘(A) IN GENERAL.—For purposes of this
subsection—
‘‘(i) any applicable dividend shall be
treated as income in a separate category in
proportion to the ratio of—
‘‘(I) the portion of the earnings
and profits described in subparagraph
(B)(ii) attributable to income in such
category, to
‘‘(II) the total amount of such
earnings and profits, and
‘‘(ii) any interest, rent, or royalty
which is received or accrued from a non-
controlled section 902 corporation with re-
spect to the taxpayer shall be treated as
income in a separate category to the extent
it is properly allocable (under regulations
prescribed by the Secretary) to income of
such corporation in such category.’’
(2) PARTNERSHIPS.—Section 904(d)(6)(C) is
amended—
(A) by inserting ‘‘or (4)(A)(ii)’’ after
‘‘paragraph (3)(C)’’, and
(B) by inserting ‘‘or noncontrolled section
902 corporations, whichever is applicable’’ after
‘‘controlled foreign corporations’’.
(3) CONFORMING AMENDMENT.—The heading
for section 904(d)(4) is amended by inserting ‘‘, in-
terest, rents, or royalties’’ after ‘‘dividends’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 206. ORDERING RULES FOR FOREIGN TAX CREDIT
CARRYOVERS.
(a) IN
GENERAL.—Section 904(c) (relating to
carryback and carryover of excess tax paid), as amended
by section 201, is amended to read as follows:
‘‘(c) CARRYBACK AND CARRYOVER OF EXCESS TAX
PAID.—
‘‘(1) IN GENERAL.—If the sum of—
‘‘(A) the foreign tax credit carryovers
under this subsection to a taxable year, plus
‘‘(B) the amount of all taxes paid to for-
eign countries or possessions of the United
States for the taxable year and for which the
taxpayer elects to have the benefits of this sub-
part apply,
exceeds the limitation under subsection (a), such ex-
cess shall be a foreign tax credit carryback to each
of the 2 preceding taxable years and a foreign tax
credit carryforward to each of the 10 following tax-
able years.
‘‘(2) ORDERING RULES.—For purposes of any
provision of the title where it is necessary to ascer-
tain the extent to which the credits to which this
subpart applies are used in a taxable year or as a
carryback or carryforward, such taxes shall be treat-
ed as used—
‘‘(A) first from carryovers to such taxable
year,
‘‘(B) then from credits arising in such tax-
able year, and
‘‘(C) finally from carrybacks to such tax-
able year.
‘‘(3) LIMITATIONS ON CARRYOVERS.—
‘‘(A) CREDIT ONLY.—A credit may be car-
ried to a taxable year under this subsection only
if the taxpayer chooses for such taxable year to
have the benefits of this subpart apply to taxes
paid or accrued to foreign countries or any pos-
sessions of the United States. Any amount so
carried may be availed of only as a credit and
not a deduction.
‘‘(B) LIMITATION TO APPLY.—The amount
of the credit carryforward or carryback to a
taxable year (the ‘carryover year’) from a tax-
able year under this subsection shall not exceed
the excess (if any) of—
‘‘(i) the limitation under subsection
(a) for the carryover year, over
‘‘(ii) the sum of—
‘‘(I) the credits arising in the
carryover year, plus
‘‘(II) 
carryforwards 
and
carrybacks to the carryover year from
taxable years earlier than the taxable
year from which the credit is being
carried (whether or not the taxpayer
chooses to have the benefits of this
subpart apply with respect to such
earlier taxable year).’’
(b) EFFECTIVE DATE.—The amendment made by
this section applies to taxable years beginning after De-
cember 31, 1998.
SEC. 207. REPEAL OF LIMITATION OF FOREIGN TAX CREDIT
UNDER ALTERNATIVE MINIMUM TAX.
(a) IN GENERAL.—Section 59(a) (relating to alter-
native minimum tax foreign tax credit) is amended by
striking paragraph (2) and by redesignating paragraphs
(3) and (4) as paragraphs (2) and (3), respectively.
(b) 
CONFORMING
AMENDMENT.—Section
53(d)(1)(B)(i)(II) is amended by striking ‘‘and if section
59(a)(2) did not apply’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
TITLE III—OTHER PROVISIONS
SEC. 301. DEDUCTION FOR DIVIDENDS RECEIVED FROM
CERTAIN FOREIGN CORPORATIONS.
(a) CONSTRUCTIVE OWNERSHIP RULES TO APPLY IN
DETERMINING 80-PERCENT OWNERSHIP.—Section 245
(a)(5) (relating to post-1986 undistributed U.S. earnings)
is amended by adding at the end the following flush sen-
tence:
‘‘Section 318(a) shall apply for purposes of subpara-
graph (B).’’
(b) DIVIDENDS TO INCLUDE SUBPART F DISTRIBU-
TIONS.—Section 245(a) is amended by adding at the end
the following new paragraph:
‘‘(12) SUBPART
F
INCLUSIONS
TREATED
AS
DIVIDENDS.—For purposes of this subsection, the
term ‘dividend’ shall include any amount the tax-
payer is required to include in gross income for the
taxable year under section 951(a).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 302. APPLICATION OF UNIFORM CAPITALIZATION
RULES TO FOREIGN PERSONS.
(a) IN GENERAL.—Section 263A(c) (relating to ex-
ceptions) is amended by adding at the end the following
new paragraph:
‘‘(7) FOREIGN
PERSONS.—This section shall
apply to any taxpayer who is not a United States
person only for purposes of applying sections
871(b)(1) and 882(a)(1).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1998. Section 481 of the Internal Revenue
Code of 1986 shall not apply to any change in a method
of accounting by reason of such amendment.
SEC. 303. TREATMENT OF MILITARY PROPERTY OF FOR-
EIGN SALES CORPORATIONS.
(a) IN GENERAL.—Section 923(a) (defining exempt
foreign trade income) is amended by striking paragraph
(5) and by redesignating paragraph (6) as paragraph (5).
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to taxable years beginning after
December 31, 1998.
SEC. 304. UNITED STATES PROPERTY NOT TO INCLUDE
CERTAIN ASSETS ACQUIRED BY DEALERS IN
ORDINARY COURSE OF TRADE OR BUSINESS.
(a) IN GENERAL.—Section 956(c)(2) is amended by
striking ‘‘and’’ at the end of subparagraph (J), by striking
the period at the end of subparagraph (K) and inserting
‘‘; and’’, and by adding at the end the following new sub-
paragraph:
‘‘(L) securities acquired and held by a con-
trolled foreign corporation in the ordinary
course of its business as a dealer in securities
if (i) the dealer accounts for the securities as
securities held primarily for sale to customers
in the ordinary course of business, and (ii) the
dealer disposes of the securities (or they mature
while held by the dealer) within a period con-
sistent with the holding of securities for sale to
customers in the ordinary course of business.’’
(b) CONFORMING AMENDMENT.—Section 956(c)(2)
is amended by striking ‘‘and (K)’’ in the last sentence and
inserting ‘‘, (K), and (L)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years of foreign corpora-
tions beginning after December 31, 1998, and to taxable
years of United States shareholders or with or within
which such taxable years of foreign corporations end.
SEC. 305. TREATMENT OF DIVIDENDS RECEIVED FROM
CERTAIN REGULATED INVESTMENT COMPA-
NIES.
(a) NONRESIDENT ALIEN INDIVIDUALS.—Section
871 (relating to tax on nonresident alien individuals) is
amended by redesignating subsection (k) as subsection (l)
and by inserting after subsection (j) the following new sub-
section:
‘‘(k) EXEMPTION FOR DIVIDENDS OF CERTAIN REG-
ULATED INVESTMENT COMPANIES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no tax shall be imposed under paragraph
(1)(A) of subsection (a) on any qualifying dividend
received from a regulated investment company which
satisfies the requirements of paragraph (3) for the
taxable year to which the dividend relates.
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply—
‘‘(A) to any dividend received from a regu-
lated investment company by a person if such
company holds at any time during the year in-
debtedness issued by such person or by any cor-
poration or partnership with respect to which
such person is a 10-percent shareholder,
‘‘(B) to any dividend received from a regu-
lated investment company unless the person
who would otherwise be required to deduct and
withhold tax from such dividend under chapter
3 receives a statement (which meets require-
ments similar to the requirements of subsection
(h)(5)) that the beneficial owner of such stock
is not a United States person,
‘‘(C) to any dividend received from a regu-
lated investment company by any person sub-
ject to tax under subsection (a)(2), and
‘‘(D) to any dividend received from a regu-
lated investment company by any person within
a foreign country (or any dividend payment ad-
dressed to, or for the account of, persons within
such foreign country) during any period de-
scribed in subsection (h)(6) with respect to such
country.
Subparagraph (D) shall not apply to any dividend
with respect to any stock which was acquired on or
before the date of the publication of the Secretary’s
determination under subsection (h)(6).
‘‘(3) ELIGIBLE REGULATED INVESTMENT COM-
PANIES.—A regulated investment company satisfies
the requirements of this paragraph for a taxable
year if—
‘‘(A) the company satisfies the require-
ments of section 852(a) for the taxable year,
and
‘‘(B) the company is a publicly offered reg-
ulated investment company (within the meaning
of section 67(c)(2)(B)).
‘‘(4) QUALIFYING DIVIDEND.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), a dividend is a qualifying dividend
if—
‘‘(i) 95 percent of the company’s gross
income for the qualifying dividend meas-
urement period consists of income from
permitted assets; and
‘‘(ii) the company treats the dividend
as exempt from any requirement to deduct
and withhold tax under section 1441 or
1442.
‘‘(B) QUALIFYING
DIVIDEND
MEASURE-
MENT
PERIOD.—For purposes of this para-
graph, the term ‘qualifying dividend measure-
ment period’ means the 12-month period ending
with the last day of the second month preceding
the month in which the dividend is paid.
‘‘(C) PERMITTED ASSETS.—For purposes
of this paragraph, and except as provided in
subparagraph (D), the term ‘permitted assets’
means—
‘‘(i) debt instruments,
‘‘(ii) cash and cash equivalents,
‘‘(iii) hedges and guarantees of debt
instruments held or to be acquired by the
company,
‘‘(iv) contracts to acquire debt instru-
ments,
‘‘(v) other interests (including options
and forward contracts) with respect to
debt instruments,
‘‘(vi) stock of a regulated investment
company satisfying the requirements of
paragraph (3), and
‘‘(vii) such other assets as the Sec-
retary may by regulations prescribe.
Income with respect to stock of a regulated in-
vestment company described in clause (vi) shall
be treated as income from permitted assets only
to the extent of qualifying dividends received
from such company and gain on the sale or ex-
change of stock in such company which is rec-
ognized in a month with respect to which such
company satisfies the requirements for payment
of a qualifying dividend.
‘‘(D) EXCEPTIONS.—The term ‘permitted
asset’ shall not include—
‘‘(i) any obligation issued by a cor-
poration or partnership in which the com-
pany is a 10-percent shareholder,
‘‘(ii) any obligation bearing interest
which is treated as not being portfolio in-
terest under the rules of subsection (h)(4),
‘‘(iii) any obligation bearing interest
or producing gain subject to a tax imposed
by a foreign jurisdiction if the amount of
such tax is reduced (or eliminated) by a
treaty with the United States,
‘‘(iv) any United States real property
interest (as defined in section 897(c)),
‘‘(v) any notional principal contract
with respect to any obligation described in
clauses (i) through (iv), and
‘‘(vi) such other assets as the Sec-
retary may by regulations prescribe.
‘‘(E) ANTIABUSE RULE.—A dividend shall
not be treated as a qualifying dividend if—
‘‘(i) the company has a principal pur-
pose of using this subsection to avoid the
provisions of paragraph (1)(A) of sub-
section (a) with respect to such dividend
and such dividend is attributable to income
other than income from permitted assets,
and
‘‘(ii) the amount of such dividend is
substantial in relation to the amount of the
company’s income from permitted assets
for the qualifying dividend measurement
period.
‘‘(5) 10-PERCENT
SHAREHOLDER.—For pur-
poses of this subsection, the term ‘10-percent share-
holder’ has the meaning given to such term by sub-
section (h)(3)(B).
‘‘(6) REGULATIONS.—The Secretary may pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations to prevent avoidance of
the tax imposed by paragraph (1)(A) of subsection
(a) through arrangements, structures, or trans-
actions that are inconsistent with the purposes of
this subsection.’’
(b) FOREIGN
CORPORATIONS.—Section 881 is
amended by redesignating subsection (e) as subsection (f)
and by inserting after subsection (d) the following new
subsection:
‘‘(e) TAX NOT TO APPLY TO DIVIDENDS OF CERTAIN
REGULATED INVESTMENT COMPANIES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), no tax shall be imposed under paragraph
(1) of subsection (a) on any qualifying dividend (as
defined in section 871(k)(4)) received from a regu-
lated investment company which satisfies the re-
quirements of section 871(k)(3).
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply—
‘‘(A) to any dividend to which section
871(k)(2) applies, and
‘‘(B) to any dividend received by a con-
trolled foreign corporation (within the meaning
of section 957(a)) if the regulated investment
company holds at any time during the taxable
year any obligation issued by a person who is
a related person (within the meaning of section
864(d)(4)) with respect to such controlled for-
eign corporation.
‘‘(3) TREATMENT OF DIVIDENDS RECEIVED BY
CONTROLLED FOREIGN CORPORATIONS.—The rules
of subsection (c)(5)(A) shall apply to any dividend
described in paragraph (1) which is received by a
controlled foreign corporation (within the meaning of
section 957(a)).’’
(c) WITHHOLDING TAXES.—
(1) Subsection (c) of section 1441 is amended
by adding at the end the following new paragraph:
‘‘(12) DIVIDENDS
RECEIVED
FROM
CERTAIN
REGULATED INVESTMENT COMPANIES.—
‘‘(A) IN GENERAL.—No tax shall be re-
quired to be deducted and withheld under sub-
section (a) from any amount exempt from the
tax imposed by section 871(a)(1)(A) by reason
of section 871(k).
‘‘(B) SPECIAL
RULE.—For purposes of
subparagraph (A), subparagraphs (A) and (C)
of section 871(k)(2) shall not apply to any divi-
dend unless the regulated investment company
knows, or has reason to know, that such divi-
dend is a dividend referred to in either of such
subparagraphs.’’
(2) Subsection (a) of section 1442 is amend-
ed—
(A) by striking ‘‘and the reference in sec-
tion 1441(c)(10)’’ and inserting ‘‘the reference
in section 1441(c)(10)’’, and
(B) by inserting before the period at the
end the following: ‘‘, and the references in sec-
tion 1441(c)(12) to sections 871(a) and 871(k),
respectively, shall be treated as referring to sec-
tions 881(a) and 881(e), respectively (except
that for purposes of applying subparagraph (A)
of section 1441(c)(12), as so modified, subpara-
graph (B) of section 881(e)(2) shall not apply
to any dividend unless the regulated investment
company knows, or has reason to know, that
such dividend is a dividend referred to in such
clause)’’.
(d) ESTATE TAX TREATMENT OF INTEREST IN CER-
TAIN
REGULATED
INVESTMENT
COMPANIES.—Section
2105 (relating to property without the United States for
estate tax purposes) is amended by adding at the end the
following new subsection:
‘‘(d) STOCK IN A RIC.—
‘‘(1) IN GENERAL.—For purposes of this sub-
chapter, stock in a regulated investment company
(as defined in section 851) owned by a nonresident
not a citizen of the United States shall not be
deemed property within the United States if—
‘‘(A) such investment company satisfies
the gross income requirement of section
871(k)(4)(A)(i) with respect to the qualifying
dividend measurement period for the month in
which the decedent’s death occurs, and
‘‘(B) such investment company satisfies
the requirements of section 871(k)(3) for the
company’s taxable year during which the dece-
dent’s date of death occurs.
‘‘(2) ANTIABUSE RULE.—Paragraph (1) shall
not apply if the company is formed or availed of
with a principal purpose of avoiding tax with respect
to assets held by the company which would be prop-
erty within the United States if held directly by a
nonresident.’’
(e) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to dividends with respect to taxable years
of regulated investment companies beginning after
the date of the enactment of this Act.
(2) ESTATE
TAX
TREATMENT.—The amend-
ments made by subsection (d) shall apply to estates
of decedents dying in taxable years of regulated in-
vestment companies beginning after the date of the
enactment of this Act.
SEC. 306. REGULATORY AUTHORITY TO EXCLUDE CERTAIN
PRELIMINARY AGREEMENTS FROM DEFINI-
TION OF INTANGIBLE PROPERTY.
(a) IN GENERAL.—Section 936(h)(3)(B) (defining
intangible property is amended by adding at the end the
following new sentence: ‘‘The Secretary shall by regulation
provide that such term shall not include any preliminary
agreement which is not legally enforceable.’’
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to agreements entered into after
the date of the enactment of this Act.
SEC. 307. AIRLINE MILEAGE AWARDS TO CERTAIN FOREIGN
PERSONS.
(a) IN GENERAL.—The last sentence of section
4261(e)(3)(C) is amended by inserting ‘‘and mileage
awards which are issued to individuals whose mailing ad-
dresses on record with the person providing the air trans-
portation are outside the United States’’ before the period
at the end thereof.
(b) EFFECTIVE DATE.—The amendment made by
this section apply to amounts paid, and benefits provided,
after December 31, 1998.
SEC. 308. REPEAL OF REDUCTION OF SUBPART F INCOME
OF EXPORT TRADE CORPORATIONS.
(a) IN GENERAL.—Subpart G of part III of sub-
chapter N of chapter 1 (relating to export trade corpora-
tions) is repealed.
(b) TREATMENT
OF CERTAIN ACTUAL DISTRIBU-
TIONS.—
(1) IN GENERAL.—For purposes of applying the
Internal Revenue Code of 1986 with respect to ac-
tual distributions of export trade income made after
December 31, 1986, by an export trade corporation
or former export trade corporation that was an ex-
port trade corporation on December 31, 1986, any
export trade income shall be treated as previously
taxed income within the meaning of section 959 of
such Code.
(2) DEFINITIONS.—For purposes of this sub-
section—
(A) EXPORT TRADE CORPORATION.—The
term ‘‘export trade corporation’’ has the mean-
ing given such term by section 971(a) of the In-
ternal Revenue Code of 1986 (as in effect be-
fore the amendment made by subsection (a)).
(B) EXPORT TRADE INCOME.—The term
‘‘export trade income’’ has the meaning given
such term by section 971(a) of the Internal
Revenue Code of 1986 (as so in effect).
(c) CONFORMING AMENDMENTS.—
(1) Section 865(e)(2)(A) is amended by striking
the last sentence.
(2) Section 1297(b)(2)(D) is amended by strik-
ing ‘‘or export trade income of an export trade cor-
poration (as defined in section 971)’’.
(3) The table of parts for part III of subchapter
N of chapter 1 is amended by striking the item re-
lating to subpart G.
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendment made by
subsection (a) shall take effect on the date of enact-
ment of this Act.
(2) DISTRIBUTIONS.—The amendment made by
subsection (b) shall take effect as if included in the
amendments made by section 1235 of the Tax Re-
form Act of 1986.
SEC. 309. STUDY OF INTEREST ALLOCATION.
(a) STUDY.—The Secretary of the Treasury or the
Secretary’s delegate shall conduct a study of the rules
under section 864(e) of the Internal Revenue Code of
1986 for allocating interest expense of members of an af-
filiated group. Such study shall include an analysis of the
effect of such rules, including the effects such rules have
on different industries.
(b) REPORT.—Not later than 6 months after the date
of enactment of this Act, the Secretary of the Treasury
shall report to the Committee on Ways and Means of the
House of Representatives and the Committee on Finance
of the Senate the results of the study conducted under
subsection (a), including recommendations (if any) for leg-
islation.
Æ