more (by vote or value) of the stock in
such corporation,
subparagraph (A) shall not apply but para-
graph (1) shall apply as if the disposition in-
volved stock which was not regularly traded.
‘‘(C) NOTIFICATION
BY
FOREIGN
PER-
SON.—If section 899 applies to any disposition
by a foreign person of regularly traded stock,
such foreign person shall notify the withholding
agent that section 899 applies to such disposi-
tion.
‘‘(3) 
NONRECOGNITION
TRANSACTIONS.—A
withholding agent shall not be required to deduct
and withhold any amount under subsection (a) in
any case where gain or loss is not recognized by rea-
son of section 899(c) (or the regulations prescribed
under such section).
‘‘(c) SPECIAL RULE WHERE NO WITHHOLDING.—
If—
‘‘(1) there is no amount deducted and withheld
under this section with respect to any disposition to
which section 899 applies, and
‘‘(2) the foreign person does not pay the tax
imposed by this subtitle to the extent attributable to
such disposition on the date prescribed therefor
for purposes of determining the amount of such tax, the
foreign person’s basis in the stock disposed of shall be
treated as zero or such other amount as the Secretary may
determine (and, for purposes of section 6501, the under-
payment of such tax shall be treated as due to a willful
attempt to evade such tax).
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) WITHHOLDING AGENT.—The term ‘with-
holding agent’ means—
‘‘(A) the last United States person to have
the control, receipt, custody, disposal, or pay-
ment of the amount realized on the disposition,
or
‘‘(B) if there is no such United States per-
son, the person prescribed in regulations.
‘‘(2) FOREIGN PERSON.—The term ‘foreign per-
son’ means any person other than a United States
person.
‘‘(3) REGULARLY TRADED STOCK.—The term
‘regularly traded stock’ means any stock of a class
which is regularly traded on an established securities
market.
‘‘(4) AUTHORITY
TO
PRESCRIBE
REDUCED
AMOUNT.—At the request of the person making the
disposition or the withholding agent, the Secretary
may prescribe a reduced amount to be withheld
under this section if the Secretary determines that
to substitute such reduced amount will not jeopard-
ize the collection of the tax imposed by section
871(b)(1) or 882(a)(1).
‘‘(5) OTHER
TERMS.—Except as provided in
this section, terms used in this section shall have the
same respective meanings as when used in section
899.
‘‘(6) CERTAIN
RULES
MADE
APPLICABLE.—
Rules similar to the rules of section 1445(e) shall
apply for purposes of this section.
‘‘(e) REGULATIONS.—The Secretary shall prescribe
such regulations as may be appropriate to carry out the
purposes of this section, including regulations coordinat-
ing the provisions of this section with the provisions of
sections 1445 and 1446.’’
(c) EXCEPTION FROM BRANCH PROFITS TAX.—Sub-
paragraph (C) of section 884(d)(2) of such Code is amend-
ed to read as follows:
‘‘(C) gain treated as effectively connected
with the conduct of a trade or business within
the United States under—
‘‘(i) section 897 in the case of the
disposition of a United States real property
interest 
described 
in 
section
897(c)(1)(A)(ii), or
‘‘(ii) section 899,’’.
(d) REPORTS WITH RESPECT
TO CERTAIN DIS-
TRIBUTIONS.—Paragraph (2) of section 6038B(a) of such
Code (relating to notice of certain transfers to foreign per-
son) is amended by striking ‘‘section 336’’ and inserting
‘‘section 302, 331, or 336’’.
(e) CLERICAL AMENDMENTS.—
(1) The table of sections for subpart D of part
II of subchapter N of chapter 1 of such Code is
amended by adding at the end the following new
item:
‘‘Sec. 899. Dispositions of stock in domestic corporations by 10-
percent foreign shareholders.’’
(2) The table of sections for subchapter A of
chapter 3 of such Code is amended by adding at the
end the following new item:
‘‘Sec. 1447. Withholding of tax on certain stock dispositions.’’
(f) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by
this section shall apply to dispositions after the date
of the enactment of this Act, except that section
1447 of such Code (as added by this section) shall
not apply to any disposition before the date 6
months after the date of the enactment of this Act.
(2) COORDINATION WITH TREATIES.—
(A) IN
GENERAL.—Sections 899 (other
than subsection (e) thereof) and 1447 of such
Code (as added by this section) shall not apply
to any disposition if such disposition is by a
qualified resident of a foreign country and the
application of such sections to such disposition
would be contrary to any treaty between the
United States and such foreign country which
is in effect on the date of the enactment of this
Act and at the time of such disposition.
(B) QUALIFIED RESIDENT.—For purposes
of subparagraph (A), the term ‘‘qualified resi-
dent’’ means any resident of the foreign country
entitled to the benefits of the treaty referred to
in subparagraph (A); except that such term
shall not include a corporation unless such cor-
poration is a qualified resident of such country
(as defined in section 884(e)(4) of such Code).
corporation, or any subsidiary or affiliate controlled
by the corporation, exceeded $10,000,000,
‘‘(2) during that same tax year parts or prod-
ucts manufactured by the corporation, or any sub-
sidiary or affiliate controlled by the corporation, with
a customs value in excess of $10,000,000 were im-
ported into the United States, and
‘‘(3) its tax obligation under this section ex-
ceeds its total tax obligation under all other sections
of this title.
‘‘(c) CREDIT FOR TAXES PAID.—There shall be a
nonrefundable credit against the taxes owed under this
section equal to the total of all other taxes paid by the
corporation under this title.
‘‘(d) DEFINITIONS.—For purposes of this section—
‘‘(1) NET BUSINESS RECEIPTS.—The term ‘net
business receipts’ means the value of all parts or
products sold in the United States, excluding—
‘‘(A) the value of parts or products sold for
export,
‘‘(B) expenses paid for parts or products
produced in the United States,
‘‘(C) expenses paid for services performed
in the United States, and
‘‘(D) amounts paid for income, sales or use
taxes imposed by any State, or political subdivi-
sion thereof, or by the District of Columbia,
Puerto Rico, Guam, or the Virgin Islands.
‘‘(2) SUBSIDIARY OR AFFILIATE CONTROLLED
BY THE CORPORATION.—An entity shall be consid-
ered to be a ‘subsidiary or affiliate controlled by the
corporation’ if the corporation owns 5 percent or
more of any class of stock of the entity or if the cor-
poration exercises control over a majority of the
board of directors of the entity.’’
(b) CLERICAL AMENDMENT.—The table of parts for
such subchapter A is amended by adding at the end the
following new item:
‘‘Part VIII. Alternative minimum tax on corporations importing
products into the United States at artificially in-
flated prices.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1996.
Æ