‘‘(A) IN GENERAL.—Except as otherwise
provided in this paragraph, an election under
paragraph (1) shall apply to the taxable year
for which made and all subsequent taxable
years unless revoked by the taxpayer. Any rev-
ocation of such election shall apply to taxable
years beginning after such revocation.
‘‘(B) TERMINATION.—If a corporation
which made an election under paragraph (1) for
any taxable year fails to meet the requirements
of subparagraph (A) or (B) of paragraph (2)
for any subsequent taxable year, such election
shall not apply to any taxable year beginning
after such subsequent taxable year.
‘‘(C) EFFECT OF REVOCATION OR TERMI-
NATION.—If a corporation which made an elec-
tion under paragraph (1) revokes such election
or such election is terminated under subpara-
graph (B), such corporation (and any successor
corporation) may not make such election for
any of the 5 taxable years beginning with the
first taxable year for which such election is not
in effect as a result of such revocation or termi-
nation.
‘‘(4) SPECIAL RULES.—
‘‘(A) 
REQUIREMENTS.—This 
subsection
shall not apply to an applicable foreign corpora-
tion if such corporation fails to meet the re-
quirements (if any) which the Secretary may
prescribe to ensure that the taxes imposed by
this chapter on such corporation are paid.
‘‘(B) EFFECT OF ELECTION, REVOCATION,
AND TERMINATION.—
‘‘(i) ELECTION.—For purposes of sec-
tion 367, a foreign corporation making an
election under this subsection shall be
treated as transferring (as of the first day
of the first taxable year to which the elec-
tion applies) all of its assets to a domestic
corporation in connection with an exchange
to which section 354 applies.
‘‘(ii) 
REVOCATION
AND
TERMI-
NATION.—For purposes of section 367,
if—
‘‘(I) an election is made by a cor-
poration under paragraph (1) for any
taxable year, and
‘‘(II) such election ceases to
apply for any subsequent taxable year,
such corporation shall be treated as a domestic
corporation transferring (as of the 1st day of
the first such subsequent taxable year to which
such election ceases to apply) all of its property
to a foreign corporation in connection with an
exchange to which section 354 applies.
‘‘(C) ELIGIBILITY
FOR
ELECTION.—The
Secretary may by regulation designate one or
more classes of corporations which may not
make the election under this subsection.
‘‘(f) RULES RELATING TO ALLOCATIONS OF QUALI-
FYING FOREIGN TRADE INCOME FROM SHARED PART-
NERSHIPS.—
‘‘(1) IN GENERAL.—If—
‘‘(A) a partnership maintains a separate
account for transactions (to which this subpart
applies) with each partner,
‘‘(B) distributions to each partner with re-
spect to such transactions are based on the
amounts in the separate account maintained
with respect to such partner, and
‘‘(C) such partnership meets such other re-
quirements as the Secretary may by regulations
prescribe,
then such partnership shall allocate to each partner
items of income, gain, loss, and deduction (including
qualifying foreign trade income) from any trans-
action to which this subpart applies on the basis of
such separate account.
‘‘(2) SPECIAL
RULES.—For purposes of this
subpart, in the case of a partnership to which para-
graph (1) applies—
‘‘(A) any partner’s interest in the partner-
ship shall not be taken into account in deter-
mining whether such partner is a related person
with respect to any other partner, and
‘‘(B) the election under section 942(a)(3)
shall be made separately by each partner with
respect to any transaction for which the part-
nership maintains separate accounts for each
partner.
‘‘(g) EXCLUSION FOR PATRONS OF AGRICULTURAL
AND HORTICULTURAL COOPERATIVES.—Any amount de-
scribed in paragraph (1) or (3) of section 1385(a)—
‘‘(1) which is received by a person from an or-
ganization to which part I of subchapter T applies
which is engaged in the marketing of agricultural or
horticultural products, and
‘‘(2) which is designated by the organization as
allocable to qualifying foreign trade income in a
written notice mailed to its patrons during the pay-
ment period described in section 1382(d),
shall be treated as qualifying foreign trade income of such
person for purposes of section 114. The taxable income
of the organization shall not be reduced under section
1382 by reason of any amount to which the preceding sen-
tence applies.’’.
SEC. 4. TECHNICAL AND CONFORMING AMENDMENTS.
(1) 
The 
second 
sentence 
of 
section
56(g)(4)(B)(i) is amended by inserting before the
period ‘‘or under section 114’’.
(2) Section 245 is amended by adding at the
end the following new subsection:
‘‘(d) CERTAIN DIVIDENDS ALLOCABLE TO QUALI-
FYING FOREIGN TRADE INCOME.—In the case of a domes-
tic corporation which is a United States shareholder (as
defined in section 951(b)) of a controlled foreign corpora-
tion (as defined in section 957), there shall be allowed as
a deduction an amount equal to 100 percent of any divi-
dend received from such controlled foreign corporation
which is distributed out of earnings and profits attrib-
utable to qualifying foreign trade income (as defined in
section 941(a)).’’.