Page 583

TITLE 26-INTERNAL REVENUE CODE had if the taxpayer had sold or exchanged the property. (iii) The Secretary shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect taxable income recog- nized solely by reason of subparagraph (A). (C) Exceptions Notwithstanding subparagraph (B), the term "disposition" does not include- (I) a disposition of property which is not a material factor in the realization of income by the taxpayer, or (iD a disposition of property to a domes- tic corporation in a distribution or trans- fer described in section 381(a). (4) Determination of foreign oil related loss where section 907 applies In the case of a corporation to which sec- tion 907(b)(1) applies, the foreign oil related loss shall be the amount by which the gross income for the taxable year from sources without the United States and its possessions (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) taken into account in determining the foreign oil related income for such year is exceeded by the sum of the deductions properly appor- tioned or allocated thereto, except that there shall not be taken into account- (A) any net operating loss deduction al- lowable for such year under section 172(a) or any capital loss carrybacks and car- ryovers to such year under section 1212, and (B) any- (i) foreign expropriation loss for such year, as defined in section 1721,h), or (ii) loss for such year which arises from fire, sto'nr, shipwreck, or other casualty, or from theft, to the extent such loss is not compensated for by insurance or otherwise. (g) Coordination with credit for the elderly In the case of an individual, for purposes of subsection (a) the tax against which the credit is taken is such tax reduced by the amount of the credit (if any) for the taxable year allowa- ble under section 37 (relating t credit for the elderly). (h) Cross reference For increase of limitation under subsection (a) for taxes psaid with respect to amounts received which were included in the gross income of thea taxpayer for a prior taxable year as a United States shareholder with respect to a controlled foreign corporation, see section 960(b). (Aug. 16, 1954, ch. 736, 68A Stat. 287; Sept. 2, 1958, Pub. L. 85-866, title 1. §42(a), 72 Stat. 1639; Sept. 14, 1960, Pub. L. 86-780, § 1. 74 Stat. 1010; Oct. 16, 1962, Pub. L. 87-834, §§ 10(a), 12(b)(2), 76 Stat. 1002, 1031; Feb. 26, 1964, Pub. L. 88-272, title II, § 234(b)(6), 78 Stat. 116; Nov. 13, 1966, Pub. L. 89-809, title I, § 106(c)(1), 80 Stat. 1570; Dec. 30, 1969, Pub. L. 91-172, title V, § 506(b), 83 Stat. 635; Dec. 10, 1971, Pub. L. 92- 178, title V, § 502(b)(2)-(4), 85 Stat. 549; Oct. 4, 1976, Pub. L. 94-455, title V, § 503(b)(1), title X, §§ 1031(a), 1032(a), 1034(a), 1051(e), title XIX, § 1901(b)(10)(B), 90 Stat. 1562, 1620, 1624, 1629, 1646, 1795,) AMENDMENTS 1976-Subsec. (a). Pub. L. 94-455, § 1031(a), struck out provisions allowing the per-country limitation, made the overall limitation applicable to all taxpayers to determine their foreign tax credit limitation, and added reference to section 901(a). Subsec. (b). Pub. L. 94-455, §§ 1031(a), 1034(a), 1051(e), redesignated former subsec. (c) as (b)(1), added provisions that the net United States capital losses would offset net foreign capital gains and, in the case of corporations, that only ao/4e of the net foreign source gain would be included in the foreign tax credit limitation, and that the gain from the sale or ex- change of personal property outside the United States would be considered United States source income unless one of three exceptions applied, and added par. (4). Subsec. W. Pub. L. 94-455, § 1031(a), redesignated former subsec. (d) as (c). and amended the redesignat- ed subsec. (c) generally to conform to the elimination of the per-country limitation in subsec. (a), Former subsec. c) was redesignated (b)(1). Subsec. d). Pub. L. 94-455, § 1031(a), redesignated former subsec. (f)(1), (2), as (d). Former subsec. (d) was redesignated (c). Subsec. (e. Pub. L. 94-455, § 1031(a), added subsec. (e). Former subsec. (e) was eliminated in view of the amendment of subsec. (a). Subsec. f). Pub. L. 94-455, §§1031(a), 1032(a), 1901(b)(10)(B), added subsec. f), and substituted "sec- tion 172(h)" for "section 172(k)(1)" in pars. (2)(B)(I) and (4)(B)(i). Former subsec. f)(1), (2), was redesig- nated d). Former subsecs. (f)(3), (4), (5) were omitted. Subsec. (g). Pub. L. 94-455, §§1032(a), 503(b)(1), added subsec. (g). Former subsec. f), redesignated (g), further redesignated as subsec. (h). Subsec. (h). Pub. L. 94-455, § 503(b)(1), redesignated former subsec. (g) as (h). 1971-Subsec. (f). Pub. L. 92-178. § 502(b)(2), inserted "and dividends from a DISC or former DISC" follow- ing "interest income" in the heading. Subsec. (f)(1). Pub. L. 92-178, § 502(b)(2), inserted "each of the following items of income" in the intro- ductory text, added subpar. (B), and redesignated former subpar. (B) as (C), inserting therein provisions respecting dividends described in subparagraph (B). Subsec. (f)(3). Pub. L. 92-178, § 502(b)(3), provided that the limitation provided by subsec. (a)(2) shall not apply to dividends described in paragraph (1)(B) and substituted "limitation provided by subsection (a)(2) applies with respect to income described in paragraph (1)(B) and (C)" for "limitation provided by subsection (a)(2) applies with respect to income other than the interest income described in paragraph (2)". Subsec. (f)(5). Pub. L. 92-178, § 502(b)(4), added par. (5). 1969-Subsec. (b)(1). Pub. L. 91-172, § 506(b)(1), sub- stituted "(A) with the consent of the Secretary or his delegate with respect -to any taxable year or (B) for the taxpayer's first taxable year beginning after De- cember 31, 1969" for "with the consent of the Secre- tary or his delegate with respect to any taxable year". Subsec. (b)(2). Pub. L. 91-172, § 506(b)(2), substituted "Except in a case to which paragraph (1)(B) applies, if the taxpayer" for "If a taxpayer". 1966--Subsec. (f)(2). Pub. L. 89-809 inserted refer- ence to ncludible corporations in an affiliated group, as defined in section 1504, of which the taxpayer is a member and inserted reference to both direct and indi- rect ownership in subpar. (C) and added provision that, for purposes of subpar. (C), stock owned directly or indirectly by or for a foreign corporation shall be considered as being proportionately owned by its shareholders. 1964-Subsec. (g)(2). Pub. L. 88-272 substituted "sec- tion 1503(b)" for "section 1503(d)". 1962--Subsec. (f). Pub. L. 87-834, § 10(a), added subsec, f) and redesignated former subsec. (f) as (g). Subsec. (g). Pub. L. 87-834, §§ 10(a), 12(b)(2), redesig- nated former subsec. (f) as (g), designated existing provisions as par. (2), and added par. (1). § 904 Page 583