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TITLE 26-INTERNAL REVENUE CODE 1960-Subsec. (a). Pub. L. 86-780, § 1(a), designated existing provisions as par. (1), added the introductory clause "In the case of any taxpayer who elects the limitation provided by this paragraph" and inserted the words "foreign", "or possession of the United States" and "or possession" therein and added par. (2). Subsec. (b). Pub. L. 86-780, § l(a), added subsec. (b), Former subsec. (b) redesignated (c). Subsec. (c). Pub. L. 86-780, § 1(b), redesignated former subsec. (b) as (c) and inserted "applicable" pre- ceding "limitation" therein, Former subsec. (c) rede- signated (d). Subsec. Cd). Pub. L. 86-780, § 1(c), redesignated former subsec. (c) as (d) and inserted "applicable" pre- ceding "limitation" in two instances therein. Subsecs. (e), (f). Pub. L. 86-780, § l(d), added subsecs. (e) and f). 1958-Subsec. (c). Pub. L. 85-866 added subsec. (c). EFFECTIVE DATE OF 1976 AMENDMENT Addition of subsec. (g) by section 503(b)(1) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 3 of this title. Section 1031(c) of Pub. L. 94-455 provided that: "(I) In general.-Except as provided in paragraphs (2) and (3), the amendments made by this section [amending sections 243(b)(3)(B), 343, 901(a), (b), 904, 907(e)(1), (2), 960(b), 1351(d)(3), 1503(b)(1), 6038(b)(1)(A) and 6501(i) of this title] shall apply to taxable years beginning after December 31, 1975. "(2) Exception for certain mining operations.-In the case of a domestic corporation or includible corpo- ration in an affiliated group (as defined in section 1504 of the Internal Revenue Code of 1954) [section 1504 of this title]) which has as of October 1, 1975- "CA) been engaged in the active conduct of the trade or business of the extraction of minerals (of a character with respect to which a deduction for de- pletion is allowable under section 813 of such Code [section 613 of this title]) outside the United States or its possessions for less than 5 years preceding the date of enactment of this Act [Oct. 4, 1976], "(B) had deductions properly apportioned or allo- cated to its gross income from such trade or business in excess of such gross income in at least 2 taxable years, "(C) 80 percent of its gross receipts are from the sale of such minerals, and "(D) made commitments for substantial expansion of such mineral extraction activities, the amendments made by this section shall apply to taxable years beginning after December 31, 1978. In the case of losses sustained in taxable years beginning before January 1, 1979, by any corporation to which this paragraph applies, the provisions of section 904(f) of such Code [section 904(f) of this title] shall be ap- plied with respect to such losses under the principles of section 904(a)(1) or such Code as in effect before the enactment of this Act (Oct. 4, 1976]. "(3) Exception for income from possessions.-In the case of gross income from sources within a possession of the United States (and the deductions properly ap- portioned or allocated thereto), the amendments made by this section shall apply to taxable years beginning after December 31, 1978. In the case of losses sus- tained in a possession of the United States in taxable years beginning before January 1, 1979, the provisions of section 904(f) of such Code [section 904(f) of this title] shall be applied with respect to such losses under the principles of section 904(a)(1) of such Code as in effect before the enactment of this Act [Oct. 4, 1976]. "(4) Carrybacks and carryovers in the case of mining operations and income from a possession.-In the case of a taxpayer to whom paragraph (2) or (3) of this subsection applies, section 904(e) of such Code [sec- tion 904(e) of this title] shall apply except that 'Janu- ary 1, 1979' shall be substituted for 'January 1, 1976' each place it appears therein. If such a taxpayer elects the overall limitation for a taxable year beginning before January 1, 1979, such section 904(e) shall be ap- plied by substituting 'the January 1, of the last year for which such taxpayer is on the per-country limita. tion' for 'January 1, 1976' each place it appears there- in.', Section 1032(c) of Pub. L. 94-455 provided that: "() In general.-Except as provided in paragraphs (2) and (3), the amendments made by subsections Ca) and (b)(2) [adding subsec. (f) of this section and re- pealing section 907(f) of this title] shall apply to losses sustained in taxable years beginning after December 31, 1975, and the amendment made by subsection (b)(1) (amending section 907(b) of this title] shall apply to taxable years beginning after December 31, 1975. "(2) Obligations of foreign governments.-The amendments made by subsection (a) [adding subsec. (f) of this section] shall not apply to losses on the sale, exchange, or other disposition of bonds, notes, or other evidences of indebtedness issued before May 14, 1976, by a foreign government or instrumentality thereof for the acquisition of property located in that country or stock of a corporation (created or organized in or under the laws of that foreign country) or in- debtedness of such corporation. "(3) Substantial worthlessness before enactment.- The amendments made by subsection (a) shall not apply to losses incurred on the loss from stock or in- debtedness of a corporation in which the taxpayer owned at least 10 percent of the voting stock and which has sustained losses in 3 out of the last 5 tax- able years beginning before January 1, 1976, which has sustained an overall loss for those 5 years, and with respect to which the taxpayer has terminated or will terminate all operations by reason of sale, liquida- tion, or other disposition before January 1, 1977, of such corporation or its assets. "(4) Limitation based on deficit in earnings and prof- its.-If paragraph (3) would apply to a taxpayer but for the fact that the loss is sustained after December 31, 1976, and if the loss is sustained in a taxable year beginning before January 1, 1979, the amendments made by subsection Ca) shall not apply to such loss to the extent that there was on December 31, 1975, a deficit in earnings and profits in the corporation from which the loss arose." Section 1034(b) of Pub. L. 94-455 provided that: "The amendment made by this section (amending subsec. (b) of this section) shall apply to taxable years beginning after December 31, 1975, except that the provisions of section 904(b)(3)(C) shall only apply to sales or exchanges made after November 12, 1975." Addition of par. (4) to subsec. (b) by section 1051(e) of Pub. L. 94-455, applicable to taxable years begin- ning after Dec. 31, 1975, with certain exceptions, see section 1052(i) of Pub. L. 94-455, set out as an Effec- tive Date of 1976 Amendment note under section 33 of this title. Amendment of subsec. (f)(2)(B)(i), (4)(B)(i), by sec- tion 1901(b)(10) of Pub. L. 94-455 applicable with re- spect to taxable years ending after Oct. 4, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Effec- tive Date of 1976 Amendment note under section 2 of this title. EFFECTIVE DATE OF 1971 AMENDMENT Amendment of subsec. (f), (f)(1) and (3) and enact- ment of subsec. (f)(5) by Pub. L. 92-178 applicable with respect to taxable years ending after Dec. 31, 1971, except that a corporation may not be a DISC for any taxable year beginning before Jan. 1, 1972, see sec- tion 507 of Pub. L. 92-178, set out as an Effective Date of 1971 Amendment note under section 991 of this title. Er-rivx DATE OF 1969 A MENDMENT Amendment by Pub. L. 91-172 applicable with re- spect to taxable years beginning after Dec. 31, 1969, see section 506(c) of Pub. L. 91-172, set out as an Ef- Page 584 § 904