‘‘(2) has substantial foreign-related person
transactions during the taxable year.
‘‘(c) EXCEPTION WHERE ALTERNATIVE METHOD
APPROVED BY THE SECRETARY.—
‘‘(1) IN
GENERAL.—Subsection (a) shall not
apply for purposes of determining the taxable in-
come of any corporation to which this section applies
from any category of business activities if, when
such corporation files its return for the taxable year,
a qualified section 482 agreement is in effect with
such corporation for such year with respect to such
category.
‘‘(2) QUALIFIED SECTION 482 AGREEMENT.—
For purposes of this subsection, the term ‘qualified
section 482 agreement’ means any agreement be-
tween the Secretary and a corporation to which this
section applies with respect to the application of this
section with respect to all transactions with related
parties in any category of business activities of such
corporation. The Secretary may enter into such an
agreement if, in the Secretary’s sole discretion, the
Secretary determines that such an agreement will re-
sult in a clear reflection of the taxable income of the
corporation from the category of activities to which
such agreement relates.
‘‘(3) AGREEMENT MAY BE GIVEN RETROACTIVE
EFFECT.—If, when entering into a qualified section
482 agreement, the Secretary determines, in the
Secretary’s sole discretion, that such agreement
should also apply to prior taxable years, the require-
ment of paragraph (1) that the agreement be in ef-
fect when the corporation files its return shall not
apply for purposes of applying such agreement to
such prior taxable years as may be specified in such
agreement.
‘‘(d) EXCEPTION WHERE SECRETARY CANNOT CAT-
EGORIZE ACTIVITIES.—In the case of a corporation whose
activities cannot be categorized by the Secretary on the
basis of 1 or more 3-digit classifications of the Standard
Industrial Classification Code as described in subsection
(h)(3), in lieu of subsection (a), there is hereby imposed
a minimum tax equal to 35 percent of the product of—
‘‘(1) 9 percent, and
‘‘(2) the gross receipts of the taxpayer from the
sale or leasing of property manufactured by the tax-
payer or by any foreign person that is a related
party of the taxpayer.
‘‘(e) WAIVER IN CASE OF CASUALTY OR DISASTER.—
This section shall not apply to the extent that the Sec-
retary determines, in the Secretary’s sole discretion, that
by reason of any casualty or disaster the application of
this section would be inequitable.
‘‘(f) TREATMENT OF FOREIGN TAXES.—For pur-
poses of this section, taxable income shall be determined
without regard to any income, war profits, or excess prof-
its taxes paid to any foreign country or to any possession
of the United States.
‘‘(g) APPLICABLE PROFIT PERCENTAGE.—
‘‘(1) IN
GENERAL.—For each calendar year
after 1995, the Secretary shall prescribe an applica-
ble profit percentage for each category of business
activities. Such percentage shall apply to taxable
years beginning in the calendar year for which pre-
scribed.
‘‘(2) BASED ON AVERAGE EARNINGS RATES.—
The applicable profit percentage prescribed under
paragraph (1) for any category of business activities
shall be based on the average earnings rates of do-
mestic corporations which had taxable income from
such category of business activities.
‘‘(3) EARNINGS RATE.—The earnings rate of
any domestic corporation for any category of busi-
ness activities shall be based on the ratio of—
‘‘(A) the adjusted book income of the do-
mestic corporation from such activity, to
‘‘(B) the gross receipts of such domestic
corporations from such activities.
For purposes of the preceding sentence, the term
‘adjusted book income’ means income as reported for
financial purposes but disregarding any reduction
for any income, war profits, or excess profits taxes
imposed by the United States, any possession of the
United States, or any foreign country.
‘‘(h) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
‘‘(1) 25-PERCENT FOREIGN OWNED.—The term
‘25-percent foreign-owned’, ‘foreign person’, and ‘re-
lated party’ have the respective meanings given such
terms by section 6038A(c).
‘‘(2) SUBSTANTIAL FOREIGN-RELATED PERSON
TRANSACTIONS.—A corporation has substantial for-
eign-related person transactions for a taxable year if
the aggregate amount involved in transactions with
related parties who are foreign persons during such
taxable year exceeds the lesser of $2,000,000 or 10
percent of the gross income of the corporation for
such taxable year. Only amounts which are taken
into account in the determination of taxable income
of the corporation shall be taken into account under
the preceding sentence.
‘‘(3) CATEGORY
OF
BUSINESS
ACTIVITIES.—
Business activities shall be categorized by reference
to the 3-digit classification of the Standard Indus-
trial Classification Code. The Secretary may provide
for the aggregation of 2 or more 3-digit classifica-
tions where appropriate and for a classification sys-
tem other than the Standard Industrial Classifica-
tion Code in appropriate cases.’’
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end the following new item:
‘‘Part VIII. Minimum tax on certain foreign and foreign-owned
corporations.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
Æ