determining the foreign income tax referred to in 
paragraph (1). 
‘‘(5) FOREIGN INCOME TAX.—For purposes of 
this section, the term ‘foreign income tax’ means 
any income, war profits, or excess profits tax paid 
or accrued to any foreign country or to any posses-
sion of the United States. 
‘‘(6) TAXES ALLOWED AS A DEDUCTION, ETC.— 
Sections 275 and 78 shall not apply to any tax 
which is not allowable as a credit under subsection 
(a) by reason of this subsection. 
‘‘(7) REGULATIONS.—The Secretary may issue 
such regulations or other guidance as is necessary or 
appropriate to carry out the purposes of this sub-
section, including to exempt from the application of 
this subsection certain covered asset acquisitions, 
and relevant foreign assets with respect to which the 
basis difference is de minimis.’’. 
(b) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall apply to covered asset acquisitions (as defined 
in section 901(m)(2) of the Internal Revenue Code 
of 1986, as added by this section) after December 
31, 2010. 
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(2) 
TRANSITION
RULE.—The 
amendments 
made by this section shall not apply to any covered 
asset acquisition (as so defined) with respect to 
which the transferor and the transferee are not re-
lated if such acquisition is— 
(A) made pursuant to a written agreement 
which was binding on May 20, 2010, and at all 
times thereafter; 
(B) described in a ruling request submitted 
to the Internal Revenue Service on or before 
such date; or 
(C) described on or before such date in a 
public announcement or in a filing with the Se-
curities and Exchange Commission. 
(3) RELATED PERSONS.—For purposes of this 
subsection, a person shall be treated as related to 
another person if the relationship between such per-
sons is described in section 267 or 707(b) of the In-
ternal Revenue Code of 1986. 
SEC. 203. SEPARATE APPLICATION OF FOREIGN TAX CRED-
IT LIMITATION, ETC., TO ITEMS RESOURCED 
UNDER TREATIES. 
(a) IN GENERAL.—Subsection (d) of section 904 is 
amended by redesignating paragraph (6) as paragraph (7) 
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and by inserting after paragraph (5) the following new 
paragraph: 
‘‘(6) 
SEPARATE
APPLICATION
TO
ITEMS 
RESOURCED UNDER TREATIES.— 
‘‘(A) IN GENERAL.—If— 
‘‘(i) without regard to any treaty obli-
gation of the United States, any item of 
income would be treated as derived from 
sources within the United States, 
‘‘(ii) under a treaty obligation of the 
United States, such item would be treated 
as arising from sources outside the United 
States, and 
‘‘(iii) the taxpayer chooses the bene-
fits of such treaty obligation, 
subsections (a), (b), and (c) of this section and 
sections 902, 907, and 960 shall be applied sep-
arately with respect to each such item. 
‘‘(B) COORDINATION WITH OTHER PROVI-
SIONS.—This paragraph shall not apply to any 
item of income to which subsection (h)(10) or 
section 865(h) applies. 
‘‘(C) REGULATIONS.—The Secretary may 
issue such regulations or other guidance as is 
necessary or appropriate to carry out the pur-
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poses of this paragraph, including regulations 
or other guidance which provides that related 
items of income may be aggregated for pur-
poses of this paragraph.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 204. LIMITATION ON THE AMOUNT OF FOREIGN TAXES 
DEEMED PAID WITH RESPECT TO SECTION 
956 INCLUSIONS. 
(a) IN GENERAL.—Section 960 is amended by adding 
at the end the following new subsection: 
‘‘(c) LIMITATION WITH RESPECT TO SECTION 956 
INCLUSIONS.— 
‘‘(1) IN GENERAL.—If there is included under 
section 951(a)(1)(B) in the gross income of a do-
mestic corporation any amount attributable to the 
earnings and profits of a foreign corporation which 
is a member of a qualified group (as defined in sec-
tion 902(b)) with respect to the domestic corpora-
tion, the amount of any foreign income taxes deemed 
to have been paid during the taxable year by such 
domestic corporation under section 902 by reason of 
subsection (a) with respect to such inclusion in gross 
income shall not exceed the amount of the foreign 
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income taxes which would have been deemed to have 
been paid during the taxable year by such domestic 
corporation if cash in an amount equal to the 
amount of such inclusion in gross income were dis-
tributed as a series of distributions (determined 
without regard to any foreign taxes which would be 
imposed on an actual distribution) through the chain 
of ownership which begins with such foreign cor-
poration and ends with such domestic corporation. 
‘‘(2) AUTHORITY
TO
PREVENT
ABUSE.—The 
Secretary shall issue such regulations or other guid-
ance as is necessary or appropriate to carry out the 
purposes of this subsection, including regulations or 
other guidance which prevent the inappropriate use 
of the foreign corporation’s foreign income taxes not 
deemed paid by reason of paragraph (1).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to acquisitions of United States 
property (as defined in section 956(c) of the Internal Rev-
enue Code of 1986) after December 31, 2010. 
SEC. 205. SPECIAL RULE WITH RESPECT TO CERTAIN RE-
DEMPTIONS BY FOREIGN SUBSIDIARIES. 
(a) IN GENERAL.—Paragraph (5) of section 304(b) 
is amended by redesignating subparagraph (B) as sub-
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