124 STAT. 2396 PUBLIC LAW 111–226—AUG. 10, 2010 (1) foreign income taxes (as defined in section 909(d) of the Internal Revenue Code of 1986, as added by this section) paid or accrued in taxable years beginning after December 31, 2010; and (2) foreign income taxes (as so defined) paid or accrued by a section 902 corporation (as so defined) in taxable years beginning on or before such date (and not deemed paid under section 902(a) or 960 of such Code on or before such date), but only for purposes of applying sections 902 and 960 with respect to periods after such date. Section 909(b)(2) of the Internal Revenue Code of 1986, as added by this section, shall not apply to foreign income taxes described in paragraph (2). DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO FOREIGN INCOME NOT SUBJECT TO UNITED STATES TAXATION BY REASON OF COVERED ASSET ACQUISITIONS SEC. 212. (a) IN GENERAL.—Section 901 of the Internal Revenue Code of 1986 is amended by redesignating subsection (m) as sub- section (n) and by inserting after subsection (l) the following new subsection: ‘‘(m) DENIAL OF FOREIGN TAX CREDIT WITH RESPECT TO FOR- EIGN INCOME NOT SUBJECT TO UNITED STATES TAXATION BY REASON OF COVERED ASSET ACQUISITIONS.— ‘‘(1) IN GENERAL.—In the case of a covered asset acquisition, the disqualified portion of any foreign income tax determined with respect to the income or gain attributable to the relevant foreign assets— ‘‘(A) shall not be taken into account in determining the credit allowed under subsection (a), and ‘‘(B) in the case of a foreign income tax paid by a section 902 corporation (as defined in section 909(d)(5)), shall not be taken into account for purposes of section 902 or 960. ‘‘(2) COVERED ASSET ACQUISITION.—For purposes of this section, the term ‘covered asset acquisition’ means— ‘‘(A) a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies, ‘‘(B) any transaction which— ‘‘(i) is treated as an acquisition of assets for pur- poses of this chapter, and ‘‘(ii) is treated as the acquisition of stock of a corporation (or is disregarded) for purposes of the for- eign income taxes of the relevant jurisdiction, ‘‘(C) any acquisition of an interest in a partnership which has an election in effect under section 754, and ‘‘(D) to the extent provided by the Secretary, any other similar transaction. ‘‘(3) DISQUALIFIED PORTION.—For purposes of this section— ‘‘(A) IN GENERAL.—The term ‘disqualified portion’ means, with respect to any covered asset acquisition, for any taxable year, the ratio (expressed as a percentage) of— ‘‘(i) the aggregate basis differences (but not below zero) allocable to such taxable year under subpara- graph (B) with respect to all relevant foreign assets, divided by Definitions. 26 USC 901.
