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TITLE 26-INTERNAL REVENUE CODE amounts of qualified indebtedness of the tax- payer shall be reduced pro-rata in the taxable year of such disposition by the amount, If any, by which- (A) the adjusted basis of such property at the time of such disposition, exceeds (B) the amount of qualified indebtedness which ceased to be qualified indebtedness with respect to the taxpayer by reason of the assumption of the indebtedness by the transferee. (d) Certain foreign corporations In the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), the taxable income for purposes of subsection (a) shall be the income which constitutes per- sonal holding company income under section 543(a)(7), reduced by the deductions attribut- able to such income, and adjusted, with respect to such income, in the manner provided in sub- section (b). (Aug. 16, 1954, ch. 736, 68A Stat. 189; Sept. 2, 1958, Pub. L. 85-866, title I, § 32(a), (b), 72 Stat. 1631; Feb. 2, 1962, Pub. L. 87-403, § 3(d), 76 Stat. 7; Oct. 16, 1962, Pub. L. 87-834, § 9(d)(2), 76 Stat. 1001; Feb. 26, 1964, Pub. L. 88-272, title II, §§ 207(b)(5), 209(c)(2), 225(t)(1), (2), 78 Stat. 42, 46, 90; Nov. 2, 1966, Pub. L. 89-719, title I, § 101(b)(2), 80 Stat. 1132; Nov. 13, 1966, Pub. L. 89-809, title I, § 104(h)(3), 80 Stat. 1560; Dec. 30, 1969, Pub. L. 91-172, title II, § 201(a)(2)(B), 83 Stat. 558; Oct. 4, 1976, Pub. L. 94-455, title X, § 1033(b)(4), title XIX, §§ 1901(a)(77), (b)(20)(B), (32)(E), (33)(D), 1906(b)(13)(A), 1951(b)(9)(A), 90 Stat. 1628, 1777, 1797, 1800, 1801, 1834, 1839.) AMmEDMmETs 1976--Subsec. (b)(1). Pub. L. 94-455, §f 1033(b)(4), 1901(a)(77)(A), struck out "(other than excess profits tax imposed by subchapter E of chapter 2 of the Inter- nal Revenue Code of 1939 for taxable years beginning after December 31, 1940)" following "Federal income and excess profits taxes"; substituted "902(a) or 960(a)(1)" for "902(a)(1) or 960(a)(1)(C)" following "corporation under section"; and struck out provisions following "prior income tax law" relating to election by taxpayer who paid Federal income and excess prof- its taxes to deduct payments, when made, for purposes of computing subehapter A net Income or, for a tax- able year ending after June 30, 1954, to deduct such taxes when accrued, such election being irrevocable and applied to taxable year for which election was made and to all subsequent taxable years. Subsec. (b)(2). Pub. L. 94-455, § 1901(b)(20)(B)(ii), substituted "paragraph (6)" for "paragraph (8)" fol- lowing "amount disallowed under". Subset. (b)(5). Pub. L. 94-455, § 1901(b)(33)(D), sub. stituted "Net" for "Long-term" following "(5)". Subsec. (b)(6). Pub. L. 94-455, §§ 1901(b)(20)(B)(i), 1906(b)(13)(A), struck out subsec. (b)(6) relating to de- duction allowed to bank affiliates, redesignated former subsec. (b)(8) as (b)(6) and, as redesignated, struck out "or his-delegate" in two places following "Secretary". Subsec. (bX7). Pub. L. 94-455, § 1901(a)(77)(B), struck out subsec. (b)(7) relating to payment of indebt- edness incurred prior to January 1, 1934. Subsec. (b)(8). Pub. L. 94-455. § 1901(b)(20)(B)(i), re- designated former subsec. (b)(8) as (b)(6). Subsee. (b)(9). Pub. L. 94-455, § 1951(b)(9)(A), struck out subsec. (b)(9) relating to the deduction of the amount of a lien in favor of the United States. Subsec. (b)(10). Pub. L. 94-455, § 1901(b)(32)(E), struck out subsec. (b)(10) relating to deduction for dis. tributions of divested stock. Subsec. (b)(11). Pub. L. 94-455, § 1901(b)(32)(E), struck out subsec. (b)(1l) relating to special adjust- ment on the disposition of antitrust stock received as a dividend. Subsec. (c)(2)(A). Pub. L. 94-455, § 1901(a)(77)(C), substituted "February 26, 1964" for "the date of enact- ment of this subsection" following "years ending before". Subsec. (c)(4). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (c)(5). Pub. L. 94-455, § 1901(b)(20)(B)(iii), substituted "subsection (b)(6)" for "subsection (b)(8)" following "company income under". 1969-Subset. (b)(2). Pub. L. 91-172 substituted "sec- tion 170(b)(1)(A), (B), and (D)", "section 170(b)(2) and (d)(1)" for "section 170(b)(1)(A) and (B)" and "section 170(b)(2) and (5)", respectively, in the provisions of the first sentence setting out the sections appropriate to the computation of the deduction, and in the provi- sions of the second sentence describing applicability of terms for purposes of this paragraph, substituted "contribution base" and "section 170(b)(2) and (d)(1)" for "adjusted gross income" and "the first sentence of section 170(b)(2) and (5)," respectively. 1966--Subsec. (a). Pub. L. 89-809, § 104(h)(3)(A), sub- stituted "in the manner provided in subsections (b), (c), and (d)" for "in the manner provided in subsection (b) and (c)" and added provisions governing the case of a personal holding company which is a foreign cor. poration. not more thano 10 percent in value of the out- standing stock of which is owned (within the meaning of section 958(a)) during the last half of the taxable year by United States persons. Subsec. (b)(9). Pub. L. 89-719 substituted "section 6323(f)" for "section 6323(a)(1), (2), or (3)". Subsec. (d). Pub. L. 89-809, § 104(h)(3)(B), added subsec. (d). 1964-Subsec. (a). Pub. L. 88-272, § 225(1)(1). Inserted the reference to subsection (c). Subsec. (b)(1), (2). Pub. L. 88-272, §§ 207(b)(5), 209(c)(2), substituted "section 275(a)(4)" for "section 164(b)(6)" in par. (1), and inserted the reference to section 170(b)(5) in par. (2). Subsec. (c). Pub. L. 88-272, § 225()(2), added subsec. (c). 1962-Subsec. (b)(1). Pub. L. 87-834 substituted "ac- crued during the taxable year or deemed to be paid by a domestic corporation under section 902(a)(1) or 960(a)(1)(C) for the taxable year" for "accrued during the taxable year". Subsec. (b)(10), (11). Pub. L. 87-403 added subsec. (b) (10), (11). 1958-Subsec. (b)(2). Pub. L. 85-866, § 32(a), substi- tuted in the first sentence ", but in computing such deduction the limitations in section 170(b)(1)(A) and (B) shall apply, and section 170(b) shall not apply" for "but with the limitations in section 170(b)(l)(A) and (B) (in lieu of the limitation in section 170(b)(2)", and inserted in the second sentence "(other than the 5-per- cent limitation)" and "the first sentence" following "with the adjustments" and "provided In", respective- ly. Subsec. (b)(4). Pub. L. 85-866, § 32(b). Inserted "com- puted without the deductions provided In part VIII (except section 248) of subchapter B". EFnmivE DATE OF 1976 AmNMENT Effective date of amendment of subsec. (b)(1) by sec- tion 1033(b)(4) of Pub. L. 94-455, see section 1033(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 902 of this title. Amendment of subsecs. .(b)(1), (2), (5) to (8), (10), (11), (c)(2)(A), (c)(5) by section 1901(a)(77), (b)(20)(B), (32)(E), (33)(D) of Pub. L. 94-455 applicable with re- spect to taxable years beginning after Dec. 31, 1976. § 545 Page 418