An Act to amend sections 902(b) and 902(c) of the Internal Revenue Code of 1954 to reduce the 50-percent requirement to 10 percent between first and second levels and to include third-level foreign corporations in the tax credit structure if the 10-percent test is met
PL 91-684 (H.R.18549), enacted 01/12/1971

2068 
PUBLIC LAW 91-684-JAN. 12, 1971 
[84 STAT. 
for any year beginning before the date of the enactment of this Act as a 
result of— 
(1) such corporation filing its income tax return on a form 1120 
(instead of a form 1120S), or 
(2) a new shareholder not consenting to such election of such 
corporation in accordance with the requirements of subsection 
(e) (1) of such section 1372. 
Approved January 12, 1971. 
72 Stat. 1651. 
26 u s e 1372. 
Public Law 91-684 
January 12, 1971 
-^N ACT 
[H. R. 18549] 
To anieiKl sections 902(b) and 902(e) of the Internal Revenue Code of 1954 
to rednc-e the oO-percent requirement to 10 percent between first and second 
levels and to include third-level foreign corporations in the tax credit stnicture 
if the 10-percent test is met. 
Be it enacted hy the Senate and Hou^e of Representatwes 
of tlie 
ZT''^' 
^ 
United States of America in Congress assemhled. That section 902(b) 
r oreign corpora" 
« i 
-
i ~r^ 
x 
-i 
#
• 
• 
^ ^ 
tions, foreign tax ot the Internal Revenue Code of 1954 is amended to read as follows: 
"%i^^^ 
,„„„ 
"(b) FOREIGN SUBSIDIARY OF FIRST AND SECOND FOREIGN CORPORA-
70 Stat. 1000, 
^ ' 
26 use 902. 
TION. 
*'(1) If the foreign corporation described in subsection (a) 
(hereinafter in this subsection referred to as the 'first foreign 
corporation") owns 10 percent or more of the voting stock of a 
second foreign corporation from which it receives dividends in 
any taxable year, it shall be deemed to have paid the same pro-
portion of any income, war profits, or excess profits taxes paid or 
deemed to be paid by such second foreign corporation to any 
foreign country or to any possession of the United States on or 
with respect to the accumulated profits of the corporation from 
which such dividends were paid which— 
"(A) for purposes of applying subsection (a)(1), the 
amount of such dividends bears to the amount of the 
accumulated profits (as defined in subsection (c) (1) (A)) of 
such second foreign corporation from which such dividends 
were paid in excess of such income, war profits, and excess 
profits taxes, or 
"(B) for purposes of applying subsection (a)(2), the 
amount of such dividends bears to the amount of the 
accumulated profits (as defined in subsection (c) (1) (B)) of 
such second foreign corporation from which such dividends 
were paid. 
"(2) If such first foreign corporation owns 10 percent or more 
of the voting stock of a second foreign corporation which, in 
turn, owns 10 percent or more of the voting stock of a third for-
eign corporation from which the second foreign corporation 
receives dividends in any taxable year, the second foreign corpora-
tion shall be deemed to have paid the same proportion of any 
income, war profits, or excess profits taxes paid by such third for-
eign corporation to any foreign country or to any possession of 
the United States on or with respect to the accumulated profits 
of the corporation from which such dividends were paid which— 
"(A) for purposes of applying subsection (a)(1), the 
amount of such dividends bears to the amount of the 
accumulated profits (as defined in subsection (c) (1) (A)) of 
such third foreign corporation from which such dividends 
were paid in excess of such income, war profits, and excess 
profits taxes, or 
84 STAT. ] 
PUBLiC L
A
W 91-685-JAN. 12, 1971 
2069 
"(B) for purposes of applying subsection (a)(2), the 
amount of such dividends bears to the amount of the 
accumulated profits (as defined in subsection (c) (1) (B)) of 
such third foreign corporation from which such dividends 
were paid. 
"(3) For purposes of this subpart, subsection (b) (1) shall not 
apply unless the percentage of voting stock owned by the domestic 
corporation in the first foreign corporation and the percentage of 
voting stock owned by the first foreign corporation in the second 
foreign corporation when multiplied together equal at least 5 per-
cent, and for purposes of this subpart, subsection (b) (2) shall not 
apply unless the percentage arrived at for purposes of applying 
subsection (b) (1) when multiplied by the percentage of voting 
stock owned by the second foreign corporation in the third foreign 
corporation is equal to at least 5 percent." 
SEC. 2. Section 902(c) (1) of the Internal Revenue Code of 1954 is 
amended— 
(1) by striking out "subsections (a) (1) and (b) (1)," in sub-
paragraph (A) and inserting in lieu thereof the following: "sub-
sections (a) (1), (b) (1) (A), and (b) (2) (A),"; and 
(2) by striking out "subsections (a) (2) and (b) (2)," in sub-
paragraph (B) and inserting in lieu thereof the following: "sub-
sections (a) (2), (b) (1) (B),and (b) (2) (B),". 
SEC. 3. The amendments made by this Act shall apply with respect 
to all taxable years of domestic corporations, ending after the date of 
enactment of this Act, but only in respect of dividends paid by one cor-
poration to another corporation after the date of the enactment of this 
Act. 
Approved January 12, 1971. 
76 Stat. 1000. 
26 u s e 902. 
Public Law 91-685 
AN ACT 
To amend the Tariff Act of 1930 to grant to the transferee of merchandise in 
bonded warehouse the right to administrative review of customs decisions. 
January 12, 1971 
[H. R. 19391] 
Be it enacted hy the SeTiate and House of Representatives of the 
United States of America in Congress assembled^ That section 557 (b) 
of the Tariff Act of 1930 (19 U.S.C. 1557(b)) is amended by striking 
out the fourth, fifth, and sixth sentences and inserting in lieu thereof 
the following: "The transferee shall also have the right to receive all 
lawful refunds of money paid by him to the United States with respect 
to the merchandise the subject of the transfer, and shall have the right 
to file a protest under section 514 of this Act to the same extent that 
such right would have been available to the transferor. Notice of 
liquidation shall be given to the transferee in the form and manner 
prescribed by the Secretary of the Treasury." 
SEC. 2. The amendment made by the first section of this Act shall 
apply with respect to articles entered for warehousing on or after the 
date of the enactment of this Act. 
Approved January 12, 1971. 
Merchandise 
transferee, pro-
test right. 
67 Stat. 519. 
Ante, 
p. 284,,