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TITLE 26-INTERNAL REVENUE CODE (B) the sale or exchange of assets used by the taxpayer in the trade or business de- scribed in subparagraph (A). (2) Foreign oil related Income The term "foreign oil related income" means the taxable income derived from sources outside the United States and its pos- sessions from- (A) the extraction (by the taxpayer or any other person) of minerals from oil or gas wells, (B) the processing of such minerals into their primary products, (C) the transportation of such minerals or primary products, (D) the distribution or sale of such miner- als or primary products, or (E) the sale or exchange of assets used by the taxpayer in the trade or business de- scribed in subparagraph (A), (B), (C), or (D). (3) Dividends, interest, partnership distribution, etc. The term "foreign oil and gas extraction income" and the term "foreign oil related income" Include- (A) dividends and interest from a foreign corporation in respect of which taxes are deemed paid by the taxpayer under section 902, (B) dividends from a domestic corporation which are treated under section 861(a)(2)(A) as income from sources with- out the United States, (C) amounts with respect to which taxes are deemed paid under section 960(a), and (D) the taxpayer's distributive share of the income of partnerships. I to the extent such dividends, interest, amounts, or distributive share is attributable to foreign oil and gas extraction income, or to foreign oil related income, as the case may be; except that interest described in subpara- graph (A) and dividends described in subpara- graph (B) shall not be taken into account in computing foreign oil and gas extraction income but shall be taken into account in computing foreign oil-related income. (4) Certain losses If for any foreign country for any taxable year the taxpayer would have a net operating loss if only items from sources within such country (including deductions properly appor- tioned or allocated thereto) which relate to the extraction of minerals from oil or gas wells were taken into account, such items- (A) shall not be taken into account in computing foreign oil and gas extraction income for such year, but (B) shall be taken into account in comput- ing foreign oil related income for such year. (5) Oil and gas extraction taxes The term "oil and gas extraction taxes" means any income, war profits, and excess profits tax paid or accrued (or deemed to have been paid under section 902 or 960) during the taxable year with respect to for- eign oil and gas extraction income (deter- mined without regard to paragraph (4)) or 'So in original, the period should probably be a comna. loss which would be taken into account for purposes of section 901 without regard to this section. (d) Disregard of certain posted prices, etc. For purposes of this chapter, in determining the amount of taxable income in the case of foreign oil and gas extraction income, if the oil or gas is disposed of, or is acquired other than from the govenrment of a foreign country, at a posted price (or other pricing arrangement) which differs from the fair market value for such oil or gas, such fair market value shall be used in lieu of such posted price (or other pric- ing arrangement). (e) Transitional rules (1) Taxable years ending after December 31, 1974 In applying subsections (d) and (e) of sec- tion 904 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1976) for purposes of determining the amount which may be carried over from a taxable year ending before January 1, 1975, to any taxable year ending after December 31, 1974- (A) subsection (a) of this section shall be deemed to have been in effect for such prior taxable year and for all taxable years there- Pfter, and (B) the carryover from such prior year shall be divided (effective as of the first day of the first taxable year ending after De- cember 31, 1974) into- (i) a foreign oil related carryover, and (it) another carryover, on the basis of the proportionate share of the foreign oil related income, or the other taxable income, as the case may be, of the total taxable income taken into account in computing the amount of such carryover. (2) Taxable years ending after December 31, 1975 In applying subsections (d) and (e) of sec- tion 904 (as in effect on the day before the date of the enactment of the Tax Reform Act of 1976) for purposes of determining the amount which may be carried over from a taxable year ending before January 1, 1976, to any taxable year ending after December 31, 1975, if the per-country limitation pro- vided by section 904(a)(1) (as so in effect) ap- plied to such prior taxable year and to the taxpayer's last taxable year ending before January 1, 1976. then in the case of any for- eign oil related carryover- (A) the first sentence of section 904(e)(2) (as so in effect) shall not apply, but (B) such amount may not exceed the amount which could have been used in such succeeding taxable year if the per-country limitation continued to apply. (f) Carryback and carryover of disallowed credits (1) In general If the amount of the oil and gas extraction taxes paid or accrued during any taxable year exceeds the limitation provided by subsection (a) for such taxable year (hereinafter In this subsection referred to as the "unused credit year"), so much of such excess as does not exceed 2 percent of foreign oil and gas extrac- tion income for such taxable year shall be Page 587 § 907