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TITLE 26-INTERNAL REVENUE CODE "The amendments made by this section [amending sections 78, 535(b)(1), 545(b)(1), 902, and 960(a)(1) of this title] shall apply- "(1) in respect of any distribution received by a do- mestic corporation after December 31, 1977, and "(2) in respect of any distribution received by a do- mestic corporation before January 1, 1978, in a tax- able year of such corporation beginning after De- cember 31, 1975, but only to the extent that such distribution is made out of the accumulated profits of a foreign corporation for a taxable year (of such foreign corporation) beginning after December 31, 1975. For purposes of paragraph (2), a distribution made by a foreign corporation out of its profits which are at- tributable to a distribution received from a foreign corporation to which section 902(b) of the Internal Revenue Code of 1954 [subsec. (b) of this section] ap- plies shall be treated as made out of the accumulated profits of a foreign corporation for a taxable year be- ginning before January 1, 1976, to the extent that such distribution was paid out of the accumulated profits of such foreign corporation for a taxable year beginning before January 1, 1976." EFFECTIVE DATE OF 1975 AMENDMENT Amendment by Pub. L. 94-12 applicable to taxable years of foreign corporations beginning after Dec. 31, 1975, and to taxable years of United States sharehold- ers (within the meaning of section 951(b) of this title) within which or with which such taxable years of such foreign corporations end, see section 602(f) of Pub. L. 94-12, set out as an Effective Date of 1975 Amendment note under section 955 of this title. EFFECTIVE DATE OF 1971 AMENDMLT Section 3 of Pub. L. 91-684 provided that: "The amendments made by this Act Eamending subsecs. (b) and (c) of this section] shall apply with respect to all taxable years of domestic corporations, ending after the date of enactment of this Act [Jan. 12, 1971], but only in respect of dividends paid by one corporation to another corporation after the date of the enactment of this Act." EFFECTIVE DATE OF 1962 AMENDMENT Section 9(e) of Pub. L. 87-834 provided that: "The amendments made by this section [adding sec- tion 78 of this title and amending sections 535, 545, 861, 901, and 902 of this title] shall apply- "(1) in respect of any distribution received by a do- mestic corporation after December 31, 1964, and "(2) In respect of any distribution received by a do- mestic corporation before January 1, 1965, in a tax- able year of such corporation beginning after De- cember 31, 1962, but only to the extent that such distribution is made out of the accumulated profits of a foreign corporation for a taxable year (of such foreign corporation) beginning after December 31, 1962. For purposes of paragraph (2), a distribution made by a foreign corporation out of its profits which are at- tributable to a distribution received from a foreign subsidiary to which section 902(b) applies shall be treated as made out of the accumulated profits of a foreign corporation for a taxable year beginning before January 1, 1963, to the extent that such distri- bution was paid out of the accumulated profits of such foreign subsidiary for a taxable year beginning before January 1, 1963." EFFECTIVE DATE OF 1960 AMENDMENT Amendment of section by Pub. L. 86-780 applicable to taxable years beginning after Dec. 31, 1960, see sec. tion 6(c) of Pub. L. 86-780), set out as an Effective Date note under section 6038 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 78, 535, 545, 819A, 901, 906, 907, 908, 954, 960, 1248, 6038 of this title. § 903, Credit for taxes in lieu of income, etc., taxes For purposes of this subpart and of sections 164(a) and 275(a), the term "income, war prof- its, and excess profits taxes" shall include a tax paid in lieu of a tax on income, war profits, or excess profits otherwise generally imposed by any foreign country or by any possession of the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 287; Feb. 26, 1964, Pub. L. 88-272, title II, § 207(b)(8), 78 Stat. 42.) AMENDMENTS 1964-Pub. L. 88-272 substituted "sections 164(a) and 275(a)" for "section 164(b)". EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 207(c) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 164 of this title. § 904. Limitation on credit (a) Limitation The total amount of the credit taken under section 901(a) shall not exceed the same pro- portion of the tax against which such credit is taken which the taxpayer's taxable income from sources without the United States (but not in excess of the taxpayer's entire taxable income) bears to his entire taxable income for the same taxable year. (b) Taxable income for purpose of computing limita. tion (1) Personal exemptions For purposes of subsection (a), the taxable income in the case of an individual, estate, or trust shall be computed without any deduc- tion for personal exemptions under section 151 or 642(b). (2) Capital gains For purposes of subsection (a)- (A) Corporations In the case of a corporation- (1) the taxable income of such corpora- tion from sources without the United States shall include gain from the sale or exchange of capital assets only in an amount equal to foreign source capital gain net income reduced by three-eighths of foreign source net capital gain, (i) the entire taxable income of such corporation shall include gain from the sale or exchange of capital assets only In an amount equal to capital gain net income reduced by three-eighths of net capital gain, and (fit) any net capital loss from sources without the United States to the extent taken into account in determining capital gain net income for the taxable year shall be reduced by an amount equal to three- eighths of the excess of net capital gain from sources within the United States over net capital gain. Page 580