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TITLE 26-INTERNAL REVENUE CODE Subsec. (e)(1). Pub. L. 94-455, § 1031(b)(6)(A), substi- tuted "d) and (e) of section 904 (as in effect on the day before the date of enactment of the Tax Reform Act of 1976)" for "(d) and (e) of section 904" following "In applying subsections". Subsec. (e)(2). Pub. L. 94-455, § 1031(b)(6), substitut- ed "(d) and (e) of section 904 (as in effect on the day before the date of enactment of the Tax Reform Act of 1976)" for "(d) and (e) of section 904" following "In applying subsections", "section 904(a)(1) (as so in effect)" for "section 904(a)(1)" following "provided by section" and, in subpar. (A), "section 904(e)(2) (as so in effect)" for "section 904(e)(2)" following "sentence of section". Subsec. f). Pub. L. 94-455, §§ 1032(b)(2), 1035(d)(1). added subsec. f). Former subsec. (f) relating to recap- ture of foreign oil related loss was stricken. Subsec. (g). Pub. L. 94-455, §§ 1032(b)(2). 1035(d)(1), 1052(c)(4), struck out subsec. (g) relating to Western Hemisphere trade corporations which are members of an affiliated group. EFFECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (e) by section 1031(b)(6)(A) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31. 1975, with exceptions for certain mining operations, income from possessions, and carryback and carryover In the case of mining operations and income from a possession, see section 1031(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 904 of this title. Amendment of subsec. Cb) by section 1032(b)(1) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31, 1975, and amendment of subsecs. (f) and (g) by section 1032(b)(2) of Pub. L. 94-455 applicable to losses sustained in taxable years beginning after Dec. 31, 1975, see section 1032(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 904 of this title. Section 1035(e) of Pub. L. 94-455 provided that: "CM) The amendment made by subsection (a) [amending subsee. (a) of this section] shall apply to taxable years ending after December 31, 1976. "(2) The amendment made by subsection Cb) [amending subsec. (b) of this section] shall apply to taxable years ending after December 31, 1974; except that the last sentence of section 907(b) of the Internal Revenue Code of 1954 [subsec. (b) of this section] shall only apply to taxable years ending after Decem- ber 31, 1975. "(3) The amendment made by subsection Cc) [enact- Ing note set out under this section] shall apply to tax- able years beginning after June 29, 1976. "(4) The amendments made by subsection Cd) [adding subsecs. (c)(5) and Cf) of this section] shall apply to taxes paid or accrued during taxable years ending after the date of the enactment of this Act [Oct. 4, 1976]." EFFECTIVE DATE Section 601(d) of Pub. L. 94-12 provided that: "The amendments made by this section shall apply to taxable years ending after December 31, 1974; except that- "(1) the second sentence of section 907(b) [subsec. (b) of this section] shall apply to taxable years ending after December 31, 1975, and "(2) the provisions of section 907(f) (subsec. f) of this section] shall apply to losses sustained in tax- able years ending after December 31, 1975." TAx CREDIT FOR PRODUCTION-SHARING CONTRACTS Section 1035(c) of Pub. L. 94-455 provided that: "(1) For purposes of section 901 of the Internal Rev- enue Code of 1954 [section 901 of this title], there shall be treated as income, war profits, and excess profits taxes to be taken into account under section 907(a) of such Code Esubsec. (a) of this section] amounts designated as income taxes of a foreign gov- ernment by such government (which otherwise would not be treated as taxes for purposes of section 901 of such Code) with respect to production-sharing con. tracts for the extraction of foreign oil or gas. "(2) The amounts specified in paragraph (1) shall not exceed the lesser of- "(A) the product of the foreign oil and gas extrac- tion income with respect to all such production-shar- ing contracts multiplied by the sum of the normal tax rate and the surtax rate for the taxable year specified in section 11 of such Code [section 11 of this title], or "(B) the excess of the total amount of foreign oil and gas extraction income (as defined in section 907(c)(1) of such Code [section 907(c)(1) of this title]) for the taxable year multiplied by the sum of the normal tax rate and the surtax rate for the tax- able year specified in section 11 of such Code over the amount of any income, war profits, and excess profits taxes paid or accrued (or deemed to have been paid) without regard to paragraph (1) during the taxable year with respect to foreign oil and gas extraction income. "(3) The production-sharing contracts taken into ac- count for purposes of paragraph (1) shall be those contracts which were entered into before April 8, 1976, for the sharing of foreign oil and gas production with a foreign government (or an entity owned by such gov- ernment) with respect to which amounts claimed as taxes paid or accrued to such foreign government for taxable years beginning before June 30, 1976, will not be disallowed as taxes. No such contract shall be taken into account for any taxable year ending after Decem- ber 31, 1977." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 904, 6501 of this title. § 908. Reduction of credit for participation in or co- operation with an international boycott (a) In general If a person, or a member of a controlled group (within the meaning of section 993(a)(3)) which includes such person, participates in or cooperates with an international boycott during the taxable year (within the meaning of section 999(b)), the amount of the credit allowable under section 901 to such person, or under sec- tion 902 or 960 to United States shareholders of such person, for foreign taxes paid during the taxable year shall be reduced by an amount equal to the product of- (1) the amount of the credit which, but for this section, would be allowed under section 901 for the taxable year, multiplied by (2) the international boycott factor (deter- mined under section 999). (b) Application with sections 275(a)(4) and 78 Section 275(a)(4) and section 78 shall not apply to any amount of taxes denied credit under subsection (a). (Added Pub. L. 94-455, title X, § 1061(a), Oct. 4, 1976, 90 Stat. 1649.) EFFECTIVE DATE Section 1066(a) of Pub. L. 94-455 provided that: "l() General rule.-The amendments made by this part (other than by section 1065) [enacting this sec- tion and section 999 of this title and amending sec- tions 952(a)(1) to (3) and 995()(1)(D) of this title] apply to participation in or cooperation with an inter- national boycott more than 30 days after the date of enactment of this Act [Oct. 4, 1976]. "(2) Existing contracts.-In the case of operations which constitute participation in or cooperation with an international boycott and which are carried out in accordance with the terms of a binding contract en- Page 589