323 
includes such transfer an amount equal to the transferred 
loss amount with respect to such transfer. 
‘‘(b) TRANSFERRED LOSS AMOUNT.—For purposes 
of this section, the term ‘transferred loss amount’ means, 
with respect to any transfer of substantially all of the as-
sets of a foreign branch, the excess (if any) of— 
‘‘(1) the sum of losses— 
‘‘(A) which were incurred by the foreign 
branch after December 31, 2017, and before 
the transfer, and 
‘‘(B) with respect to which a deduction was 
allowed to the taxpayer, over 
‘‘(2) the sum of— 
‘‘(A) any taxable income of such branch 
for a taxable year after the taxable year in 
which the loss was incurred and through the 
close of the taxable year of the transfer, and 
‘‘(B) any amount which is recognized 
under section 904(f)(3) on account of the trans-
fer. 
‘‘(c) REDUCTION FOR RECOGNIZED GAINS.— 
‘‘(1) IN GENERAL.—In the case of a transfer 
not described in section 367(a)(3)(C), the trans-
ferred loss amount shall be reduced (but not below 
zero) by the amount of gain recognized by the tax-
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payer on account of the transfer (other than 
amounts taken into account under subsection 
(c)(2)(B)). 
‘‘(2) 
COORDINATION
WITH
RECOGNITION 
UNDER SECTION 367.—In the case of a transfer de-
scribed in section 367(a)(3)(C), the transferred loss 
amount shall not exceed the excess (if any) of— 
‘‘(A) the excess of the amount described in 
section 367(a)(3)(C)(i) over the amount de-
scribed in section 367(a)(3)(C)(ii) with respect 
to such transfer, over 
‘‘(B) the amount of gain recognized under 
section 367(a)(3)(C) with respect to such trans-
fer. 
‘‘(d) SOURCE
OF INCOME.—Amounts included in 
gross income under this section shall be treated as derived 
from sources within the United States. 
‘‘(e) BASIS ADJUSTMENTS.—Consistent with such 
regulations or other guidance as the Secretary may pre-
scribe, proper adjustments shall be made in the adjusted 
basis of the taxpayer’s stock in the specified 10-percent 
owned foreign corporation to which the transfer is made, 
and in the transferee’s adjusted basis in the property 
transferred, to reflect amounts included in gross income 
under this section.’’. 
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(2) AMOUNTS RECOGNIZED UNDER SECTION 367 
ON
TRANSFER
OF
FOREIGN
BRANCH
WITH
PRE-
VIOUSLY DEDUCTED LOSSES TREATED AS UNITED 
STATES SOURCE.—Section 367(a)(3)(C) is amended 
by striking ‘‘outside’’ in the last sentence and insert-
ing ‘‘within’’. 
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part II of subchapter B of chapter 1 is 
amended by adding at the end the following new 
item: 
‘‘Sec. 91. Certain foreign branch losses transferred to specified 10-percent 
owned foreign corporations.’’. 
(4) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to transfers after De-
cember 31, 2017. 
SEC. 4004. TREATMENT OF DEFERRED FOREIGN INCOME 
UPON TRANSITION TO PARTICIPATION EX-
EMPTION SYSTEM OF TAXATION. 
(a) IN GENERAL.—Section 965 is amended to read 
as follows: 
‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME 
UPON TRANSITION TO PARTICIPATION EX-
EMPTION SYSTEM OF TAXATION. 
‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME 
AS SUBPART F INCOME.—In the case of the last taxable 
year of a deferred foreign income corporation which begins 
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before January 1, 2018, the subpart F income of such 
foreign corporation (as otherwise determined for such tax-
able year under section 952) shall be increased by the 
greater of— 
‘‘(1) the accumulated post-1986 deferred for-
eign income of such corporation determined as of 
November 2, 2017, or 
‘‘(2) the accumulated post-1986 deferred for-
eign income of such corporation determined as of 
December 31, 2017. 
‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN GROSS 
INCOME OF UNITED STATES SHAREHOLDERS OF SPECI-
FIED FOREIGN CORPORATIONS WITH DEFICITS IN EARN-
INGS AND PROFITS.— 
‘‘(1) IN GENERAL.—In the case of a taxpayer 
which is a United States shareholder with respect to 
at least one deferred foreign income corporation and 
at least one E&P deficit foreign corporation, the 
amount which would (but for this subsection) be 
taken into account under section 951(a)(1) by rea-
son of subsection (a) as such United States share-
holder’s pro rata share of the subpart F income of 
each deferred foreign income corporation shall be re-
duced (but not below zero) by the amount of such 
United States shareholder’s aggregate foreign E&P 
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deficit which is allocated under paragraph (2) to 
such deferred foreign income corporation. 
‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P 
DEFICIT.—The aggregate foreign E&P deficit of any 
United States shareholder shall be allocated among 
the deferred foreign income corporations of such 
United States shareholder in an amount which bears 
the same proportion to such aggregate as— 
‘‘(A) such United States shareholder’s pro 
rata share of the accumulated post-1986 de-
ferred foreign income of each such deferred for-
eign income corporation, bears to 
‘‘(B) the aggregate of such United States 
shareholder’s pro rata share of the accumulated 
post-1986 deferred foreign income of all de-
ferred foreign income corporations of such 
United States shareholder. 
‘‘(3) DEFINITIONS
RELATED
TO
E&P
DEFI-
CITS.—For purposes of this subsection— 
‘‘(A) AGGREGATE
FOREIGN
E&P
DEF-
ICIT.—The term ‘aggregate foreign E&P deficit’ 
means, with respect to any United States share-
holder, the aggregate of such shareholder’s pro 
rata shares of the specified E&P deficits of the 
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E&P deficit foreign corporations of such share-
holder. 
‘‘(B) E&P DEFICIT
FOREIGN
CORPORA-
TION.—The term ‘E&P deficit foreign corpora-
tion’ means, with respect to any taxpayer, any 
specified foreign corporation with respect to 
which such taxpayer is a United States share-
holder, if— 
‘‘(i) such specified foreign corporation 
has a deficit in post-1986 earnings and 
profits, and 
‘‘(ii) as of November 2, 2017— 
‘‘(I) such corporation was a spec-
ified foreign corporation, and 
‘‘(II) such taxpayer was a United 
States shareholder of such corpora-
tion. 
‘‘(C) SPECIFIED E&P DEFICIT.—The term 
‘specified E&P deficit’ means, with respect to 
any E&P deficit foreign corporation, the 
amount of the deficit referred to in subpara-
graph (B). 
‘‘(4) NETTING AMONG UNITED STATES SHARE-
HOLDERS IN SAME AFFILIATED GROUP.— 
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‘‘(A) IN GENERAL.—In the case of any af-
filiated group which includes at least one E&P 
net surplus shareholder and one E&P net def-
icit shareholder, the amount which would (but 
for this paragraph) be taken into account under 
section 951(a)(1) by reason of subsection (a) by 
each such E&P net surplus shareholder shall be 
reduced (but not below zero) by such share-
holder’s applicable share of the affiliated 
group’s aggregate unused E&P deficit. 
‘‘(B) 
E&P 
NET
SURPLUS
SHARE-
HOLDER.—For purposes of this paragraph, the 
term ‘E&P net surplus shareholder’ means any 
United States shareholder which would (deter-
mined without regard to this paragraph) take 
into account an amount greater than zero 
under section 951(a)(1) by reason of subsection 
(a). 
‘‘(C) E&P NET DEFICIT SHAREHOLDER.— 
For purposes of this paragraph, the term ‘E&P 
net deficit shareholder’ means any United 
States shareholder if— 
‘‘(i) the aggregate foreign E&P deficit 
with respect to such shareholder (as de-
fined in paragraph (3)(A)), exceeds 
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‘‘(ii) the amount which would (but for 
this subsection) be taken into account by 
such shareholder under section 951(a)(1) 
by reason of subsection (a). 
‘‘(D) AGGREGATE UNUSED E&P DEFICIT.— 
For purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘aggre-
gate unused E&P deficit’ means, with re-
spect to any affiliated group, the lesser 
of— 
‘‘(I) the sum of the excesses de-
scribed in subparagraph (C), deter-
mined with respect to each E&P net 
deficit shareholder in such group, or 
‘‘(II) the amount determined 
under subparagraph (E)(ii). 
‘‘(ii) REDUCTION WITH RESPECT TO 
E&P NET DEFICIT SHAREHOLDERS WHICH 
ARE NOT WHOLLY OWNED BY THE AFFILI-
ATED GROUP.—If the group ownership per-
centage of any E&P net deficit shareholder 
is less than 100 percent, the amount of the 
excess described in subparagraph (C) 
which is taken into account under clause 
(i)(I) with respect to such E&P net deficit 
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shareholder shall be such group ownership 
percentage of such amount. 
‘‘(E) APPLICABLE SHARE.—For purposes 
of this paragraph, the term ‘applicable share’ 
means, with respect to any E&P net surplus 
shareholder in any affiliated group, the amount 
which bears the same proportion to such 
group’s aggregate unused E&P deficit as— 
‘‘(i) the product of— 
‘‘(I) such shareholder’s group 
ownership percentage, multiplied by 
‘‘(II) the amount which would 
(but for this paragraph) be taken into 
account under section 951(a)(1) by 
reason of subsection (a) by such 
shareholder, bears to 
‘‘(ii) the aggregate amount deter-
mined under clause (i) with respect to all 
E&P net surplus shareholders in such 
group. 
‘‘(F) GROUP OWNERSHIP PERCENTAGE.— 
For purposes of this paragraph, the term 
‘group ownership percentage’ means, with re-
spect to any United States shareholder in any 
affiliated group, the percentage of the value of 
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the stock of such United States shareholder 
which is held by other includible corporations in 
such affiliated group. Notwithstanding the pre-
ceding sentence, the group ownership percent-
age of the common parent of the affiliated 
group is 100 percent. Any term used in this 
subparagraph which is also used in section 
1504 shall have the same meaning as when 
used in such section. 
‘‘(c) APPLICATION OF PARTICIPATION EXEMPTION 
TO INCLUDED INCOME.— 
‘‘(1) IN GENERAL.—In the case of a United 
States shareholder of a deferred foreign income cor-
poration, there shall be allowed as a deduction for 
the taxable year in which an amount is included in 
the gross income of such United States shareholder 
under section 951(a)(1) by reason of this section an 
amount equal to the sum of— 
‘‘(A) the United States shareholder’s 5 
percent rate equivalent percentage of the excess 
(if any) of— 
‘‘(i) the amount so included as gross 
income, over 
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‘‘(ii) the amount of such United 
States shareholder’s aggregate foreign cash 
position, plus 
‘‘(B) the United States shareholder’s 12 
percent rate equivalent percentage of so much 
of the amount described in subparagraph (A)(ii) 
as does not exceed the amount described in sub-
paragraph (A)(i). 
‘‘(2) 5 AND
PERCENT
RATE
EQUIVALENT 
PERCENTAGES.—For purposes of this subsection— 
‘‘(A) 5 PERCENT RATE EQUIVALENT PER-
CENTAGE.—The term ‘5 percent rate equivalent 
percentage’ means, with respect to any United 
States shareholder for any taxable year, the 
percentage which would result in the amount to 
which such percentage applies being subject to 
a 5 percent rate of tax determined by only tak-
ing into account a deduction equal to such per-
centage of such amount and the highest rate of 
tax specified in section 11 for such taxable 
year. In the case of any taxable year of a 
United States shareholder to which section 15 
applies, the highest rate of tax under section 11 
before the effective date of the change in rates 
and the highest rate of tax under section 11 
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334 
after the effective date of such change shall 
each be taken into account under the preceding 
sentence in the same proportions as the portion 
of such taxable year which is before and after 
such effective date, respectively. 
‘‘(B) 12 PERCENT RATE EQUIVALENT PER-
CENTAGE.—The term ‘12 percent rate equiva-
lent percentage’ means, with respect to any 
United States shareholder for any taxable year, 
the percentage determined under subparagraph 
(A) applied by substituting ‘12 percent rate of 
tax’ for ‘5 percent rate of tax’. 
‘‘(3) AGGREGATE FOREIGN CASH POSITION.— 
For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘aggregate 
foreign cash position’ means, with respect to 
any United States shareholder, one-third of the 
sum of— 
‘‘(i) the aggregate of such United 
States shareholder’s pro rata share of the 
cash position of each specified foreign cor-
poration of such United States shareholder 
determined as of November 2, 2017, 
‘‘(ii) the aggregate described in clause 
(i) determined as of the close of the last 
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335 
taxable year of each such specified foreign 
corporation which ends before November 2, 
2017, and 
‘‘(iii) the aggregate described in 
clause (i) determined as of the close of the 
taxable year of each such specified foreign 
corporation which precedes the taxable 
year referred to in clause (ii). 
In the case of any foreign corporation which did 
not exist as of the determination date described 
in clause (ii) or (iii), this subparagraph shall be 
applied separately to such foreign corporation 
by not taking into account such clause and by 
substituting ‘one-half (100 percent in the case 
that both clauses (ii) and (iii) are disregarded)’ 
for ‘one-third’. 
‘‘(B) CASH
POSITION.—For purposes of 
this paragraph, the cash position of any speci-
fied foreign corporation is the sum of— 
‘‘(i) cash held by such foreign cor-
poration, 
‘‘(ii) the net accounts receivable of 
such foreign corporation, plus 
‘‘(iii) the fair market value of the fol-
lowing assets held by such corporation: 
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‘‘(I) Actively traded personal 
property for which there is an estab-
lished financial market. 
‘‘(II) Commercial paper, certifi-
cates of deposit, the securities of the 
Federal government and of any State 
or foreign government. 
‘‘(III) Any foreign currency. 
‘‘(IV) Any obligation with a term 
of less than one year. 
‘‘(V) Any asset which the Sec-
retary identifies as being economically 
equivalent to any asset described in 
this subparagraph. 
‘‘(C) NET
ACCOUNTS
RECEIVABLE.—For 
purposes of this paragraph, the term ‘net ac-
counts receivable’ means, with respect to any 
specified foreign corporation, the excess (if any) 
of— 
‘‘(i) such corporation’s accounts re-
ceivable, over 
‘‘(ii) such corporation’s accounts pay-
able (determined consistent with the rules 
of section 461). 
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337 
‘‘(D) PREVENTION
OF
DOUBLE
COUNT-
ING.— 
‘‘(i) IN
GENERAL.—The applicable 
percentage of each specified cash position 
of a specified foreign corporation shall not 
be taken into account by— 
‘‘(I) the United States share-
holder referred to in clause (ii) with 
respect to such position, or 
‘‘(II) any United States share-
holder which is an includible corpora-
tion in the same affiliated group as 
such United States shareholder re-
ferred to in clause (ii). 
‘‘(ii) SPECIFIED CASH POSITION.—For 
purposes of this subparagraph, the term 
‘specified cash position’ means— 
‘‘(I) amounts described in sub-
paragraph (B)(ii) to the extent such 
amounts are receivable from another 
specified foreign corporation with re-
spect to any United States share-
holder, 
‘‘(II) amounts described in sub-
paragraph (B)(iii)(I) to the extent 
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338 
such amounts consist of an equity in-
terest in another specified foreign cor-
poration with respect to any United 
States shareholder, and 
‘‘(III) amounts described in sub-
paragraph (B)(iii)(IV) to the extent 
that another specified foreign corpora-
tion with respect to any United States 
shareholder is obligated to repay such 
amount. 
‘‘(iii) APPLICABLE
PERCENTAGE.— 
For purposes of this subparagraph, the 
term ‘applicable percentage’ means— 
‘‘(I) with respect to each speci-
fied cash position described in sub-
clause (I) or (III) of clause (ii), the 
pro rata share of the United States 
shareholder referred to in clause (ii) 
with respect to the specified foreign 
corporation referred to in such clause, 
and 
‘‘(II) with respect to each speci-
fied cash position described in clause 
(ii)(II), the ratio (expressed as a per-
centage and not in excess of 100 per-
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339 
cent) of the United States share-
holder’s pro rata share of the cash po-
sition of the specified foreign corpora-
tion referred to in such clause divided 
by the amount of such specified cash 
position. 
For purposes of this subparagraph, a sepa-
rate applicable percentage shall be deter-
mined under each of subclauses (I) and 
(II) with respect to each specified foreign 
corporation referred to in clause (ii) with 
respect to which a specified cash position 
is determined for the specified foreign cor-
poration referred to in clause (i). 
‘‘(iv) REDUCTION WITH RESPECT TO 
AFFILIATED GROUP MEMBERS NOT WHOL-
LY OWNED BY THE AFFILIATED GROUP.— 
For purposes of clause (i)(II), in the case 
of an includible corporation the group own-
ership percentage of which is less than 100 
percent (as determined under subsection 
(b)(4)(F)), the amount not take into ac-
count by reason of such clause shall be the 
group 
ownership 
percentage 
of 
such 
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340 
amount (determined without regard to this 
clause). 
‘‘(E) CERTAIN
BLOCKED
ASSETS
NOT 
TAKEN INTO ACCOUNT.—A cash position of a 
specified foreign corporation shall not be taken 
into account under subparagraph (A) if such 
position could not (as of the date that it would 
otherwise have been taken into account under 
clause (i), (ii), or (iii) of subparagraph (A)) 
have been distributed by such specified foreign 
corporation to United States shareholders of 
such specified foreign corporation because of 
currency or other restrictions or limitations im-
posed under the laws of any foreign country 
(within the meaning of section 964(b)). 
‘‘(F) CASH POSITIONS OF CERTAIN NON- 
CORPORATE ENTITIES TAKEN INTO ACCOUNT.— 
An entity (other than a domestic corporation) 
shall be treated as a specified foreign corpora-
tion of a United States shareholder for pur-
poses of determining such United States share-
holder’s aggregate foreign cash position if any 
interest in such entity is held by a specified for-
eign corporation of such United States share-
holder (determined after application of this sub-
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341 
paragraph) and such entity would be a specified 
foreign corporation of such United States 
shareholder if such entity were a foreign cor-
poration 
‘‘(G) TIME
OF
CERTAIN
DETERMINA-
TIONS.—For purposes of this paragraph, the 
determination of whether a person is a United 
States shareholder, whether a person is a speci-
fied foreign corporation, and the pro rata share 
of a United States shareholder with respect to 
a specified foreign corporation, shall be deter-
mined as of the end of the taxable year de-
scribed in subsection (a). 
‘‘(H) ANTI-ABUSE.—If the Secretary de-
termines that the principal purpose of any 
transaction was to reduce the aggregate foreign 
cash position taken into account under this sub-
section, such transaction shall be disregarded 
for purposes of this subsection. 
‘‘(d) DEFERRED FOREIGN INCOME CORPORATION; 
ACCUMULATED
POST-1986 DEFERRED
FOREIGN
IN-
COME.—For purposes of this section— 
‘‘(1) DEFERRED
FOREIGN
INCOME
CORPORA-
TION.—The term ‘deferred foreign income corpora-
tion’ means, with respect to any United States 
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342 
shareholder, any specified foreign corporation of 
such United States shareholder which has accumu-
lated post-1986 deferred foreign income (as of the 
date referred to in paragraph (1) or (2) of sub-
section (a), whichever is applicable with respect to 
such foreign corporation) greater than zero. 
‘‘(2) ACCUMULATED POST-1986 DEFERRED FOR-
EIGN
INCOME.—The term ‘accumulated post-1986 
deferred foreign income’ means the post-1986 earn-
ings and profits except to the extent such earnings— 
‘‘(A) are attributable to income of the 
specified foreign corporation which is effectively 
connected with the conduct of a trade or busi-
ness within the United States and subject to 
tax under this chapter, or 
‘‘(B) if distributed, would be excluded from 
the gross income of a United States shareholder 
under section 959. 
To the extent provided in regulations or other guid-
ance prescribed by the Secretary, in the case of any 
controlled foreign corporation which has share-
holders which are not United States shareholders, 
accumulated post-1986 deferred foreign income shall 
be appropriately reduced by amounts which would be 
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343 
described in subparagraph (B) if such shareholders 
were United States shareholders. 
‘‘(3) POST-1986 EARNINGS AND PROFITS.—The 
term ‘post-1986 earnings and profits’ means the 
earnings and profits of the foreign corporation (com-
puted in accordance with sections 964(a) and 986) 
accumulated in taxable years beginning after Decem-
ber 31, 1986, and determined— 
‘‘(A) as of the date referred to in para-
graph (1) or (2) of subsection (a), whichever is 
applicable with respect to such foreign corpora-
tion, 
‘‘(B) without diminution by reason of divi-
dends distributed during the taxable year end-
ing with or including such date, and 
‘‘(C) increased by the amount of any quali-
fied deficit (within the meaning of section 
952(c)(1)(B)(ii)) arising before January 1, 
2018, which is treated as a qualified deficit 
(within the meaning of such section as amended 
by the Tax Cuts and Jobs Act) for purposes of 
such foreign corporation’s first taxable year be-
ginning after December 31, 2017. 
‘‘(e) SPECIFIED FOREIGN CORPORATION.— 
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344 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, 
the 
term 
‘specified 
foreign 
corporation’ 
means— 
‘‘(A) any controlled foreign corporation, 
and 
‘‘(B) any foreign corporation with respect 
to which one or more domestic corporations is 
a United States shareholder (determined with-
out regard to section 958(b)(4)). 
‘‘(2) APPLICATION TO CERTAIN FOREIGN COR-
PORATIONS.—For purposes of sections 951 and 961, 
a foreign corporation described in paragraph (1)(B) 
shall be treated as a controlled foreign corporation 
solely for purposes of taking into account the sub-
part F income of such corporation under subsection 
(a) (and for purposes of applying subsection (f)). 
‘‘(3) EXCEPTION
FOR
PASSIVE
FOREIGN
IN-
VESTMENT COMPANIES.—The term ‘specified foreign 
corporation’ shall not include any passive foreign in-
vestment company (within the meaning of subpart D 
of part VI of subchapter P) that is not a controlled 
foreign corporation. 
‘‘(f) DETERMINATIONS OF PRO RATA SHARE.—For 
purposes of this section, the determination of any United 
States shareholder’s pro rata share of any amount with 
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respect to any specified foreign corporation shall be deter-
mined under rules similar to the rules of section 951(a)(2) 
by treating such amount in the same manner as subpart 
F income (and by treating such specified foreign corpora-
tion as a controlled foreign corporation). 
‘‘(g) DISALLOWANCE
OF FOREIGN TAX CREDIT, 
ETC.— 
‘‘(1) IN GENERAL.—No credit shall be allowed 
under section 901 for the applicable percentage of 
any taxes paid or accrued (or treated as paid or ac-
crued) with respect to any amount for which a de-
duction is allowed under this section. 
‘‘(2) APPLICABLE PERCENTAGE.—For purposes 
of this subsection, the term ‘applicable percentage’ 
means the amount (expressed as a percentage) equal 
to the sum of— 
‘‘(A) 85.7 percent of the ratio of— 
‘‘(i) the excess to which subsection 
(c)(1)(A) applies, divided by 
‘‘(ii) the sum of such excess plus the 
amount to which subsection (c)(1)(B) ap-
plies, plus 
‘‘(B) 65.7 percent of the ratio of— 
‘‘(i) the amount to which subsection 
(c)(1)(B) applies, divided by 
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‘‘(ii) the sum described in subpara-
graph (A)(ii). 
‘‘(3) DENIAL
OF
DEDUCTION.—No deduction 
shall be allowed under this chapter for any tax for 
which credit is not allowable under section 901 by 
reason of paragraph (1) (determined by treating the 
taxpayer as having elected the benefits of subpart A 
of part III of subchapter N). 
‘‘(4) COORDINATION WITH SECTION 78.—Sec-
tion 78 shall not apply to any tax for which credit 
is not allowable under section 901 by reason of para-
graph (1). 
‘‘(5) EXTENSION OF FOREIGN TAX CREDIT CAR-
RYOVER PERIOD.—With respect to any taxes paid or 
accrued (or treated as paid or accrued) with respect 
to any amount for which a deduction is allowed 
under this section, section 904(c) shall be applied by 
substituting ‘first 20 succeeding taxable years’ for 
‘first 10 succeeding taxable years’. 
‘‘(h) ELECTION TO PAY LIABILITY
IN INSTALL-
MENTS.— 
‘‘(1) IN GENERAL.—In the case of a United 
States shareholder of a deferred foreign income cor-
poration, such United States shareholder may elect 
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to pay the net tax liability under this section in 8 
equal installments. 
‘‘(2) DATE FOR PAYMENT OF INSTALLMENTS.— 
If an election is made under paragraph (1), the first 
installment shall be paid on the due date (deter-
mined without regard to any extension of time for 
filing the return) for the return of tax for the tax-
able year described in subsection (a) and each suc-
ceeding installment shall be paid on the due date (as 
so determined) for the return of tax for the taxable 
year following the taxable year with respect to which 
the preceding installment was made. 
‘‘(3) ACCELERATION OF PAYMENT.—If there is 
an addition to tax for failure to timely pay any in-
stallment required under this subsection, a liquida-
tion or sale of substantially all the assets of the tax-
payer (including in a title 11 or similar case), a ces-
sation of business by the taxpayer, or any similar 
circumstance, then the unpaid portion of all remain-
ing installments shall be due on the date of such 
event (or in the case of a title 11 or similar case, 
the day before the petition is filed). The preceding 
sentence shall not apply to the sale of substantially 
all the assets of a taxpayer to a buyer if such buyer 
enters into an agreement with the Secretary under 
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which such buyer is liable for the remaining install-
ments due under this subsection in the same manner 
as if such buyer were the taxpayer. 
‘‘(4) PRORATION OF DEFICIENCY TO INSTALL-
MENTS.—If an election is made under paragraph (1) 
to pay the net tax liability under this section in in-
stallments and a deficiency has been assessed with 
respect to such net tax liability, the deficiency shall 
be prorated to the installments payable under para-
graph (1). The part of the deficiency so prorated to 
any installment the date for payment of which has 
not arrived shall be collected at the same time as, 
and as a part of, such installment. The part of the 
deficiency so prorated to any installment the date 
for payment of which has arrived shall be paid upon 
notice and demand from the Secretary. This sub-
section shall not apply if the deficiency is due to 
negligence, to intentional disregard of rules and reg-
ulations, or to fraud with intent to evade tax. 
‘‘(5) ELECTION.—Any election under paragraph 
(1) shall be made not later than the due date for the 
return of tax for the taxable year described in sub-
section (a) and shall be made in such manner as the 
Secretary may provide. 
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