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TITLE 26-INTERNAL REVENUE CODE able year for which such election was made and for which the domestic corporation satis- fied the conditions of subparagraphs (A) and (B) of subsection (a)(1) and for each taxable year thereafter until such election is revoked by the domestic corporation under paragraph (2). If any such election is revoked by the do- mestic corporation under paragraph (2), such domestic corporation may make a subsequent election under subsection (a) for any taxable year thereafter for which such domestic cor- poration satisfies the conditions of subpara- graphs (A) and (B) of subsection (a)(1) and any such subsequent election shall remain in effect until revoked by such domestic corpo- ration under paragraph (2). (2) Revocation An election under subsection (a)- (A) may be revoked for any taxable year beginning before the expiration of the 9th taxable year following the taxable year for which such election first applies only with the consent of the Secretary; and (B) may be revoked for any taxable year beginning after the expiration of such 9th taxable year without the consent of the Secretary. f) DISC or former DISC corporation ineligible for credit No credit shall be allowed under this section to a corporation for a taxable year for which it is a DISC or former DISC (as defined in section 992(a)) or in which it owns at any time stock in a DISC or former DISC. (g) Exception to accumulated earnings tax (1) For purposes of section 535, the term "accumulated taxable income" shall not in- clude taxable income entitled to the credit under subsection (a). (2) For purposes of section 537, the term "reasonable needs of the business" includes assets which produce income eligible for the credit under subsection (a). (Added Pub. L. 94-455, title X, § 1051(b), Oct. 4, 1976, 90 Stat. 1643, and amended Pub. L. 94- 455, title XIX, § 1901(b)(37)(B), Oct. 4, 1976, 90 Stat. 1803.) AMENDMENTS 1976-Subsee. (a)(2). Pub. L. 94-455, § 1901(b)(37)(B), struck out subpar. (D), relating to war loss recoveries. EFPEECTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (a)(2) by section 1901(b)(37)(B) of Pub. L. 94-455 applicable with re- spect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Ef- fective Date of 1976 Amendment note under section 2 of this title. EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1975, except that qualified possession source investment income as defined in subsec. (d)(2) of this section shall include income from any source outside the United States if the taxpayer establishes to the satisfaction of the Secretary of the Treasury or his delegate that the income from such sources was earned before Oct. 1, 1976, see section 1051(i) of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 33 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 33, 48, 243, 901, 904, 1504 of this title. SUBPART E-CHINA TRADE ACT CORPORATIONS Sec. 941. Special deduction for China Trade Act corpora- tions. 942. Disallowance of foreign tax credit. 943. Exclusion of dividends to residents of Formosa or Hong Kong. REPEALS Subpart E and sections 941 to 943 of this title were repealed by Pub. L. 94-445, title X, § 1053(c), Oct. 4, 1976, 90 Stat. 1649, applica- ble with respect to taxable years beginning after Dec. 31, 1977. § 941. Special deduction for China Trade Act corpora. tions (a) Allowance of deduction For purposes only of the taxes imposed by section 11, there shall be allowed, in the case of a corporation organized under the China Trade Act, 1922 (15 U.S.C. ch. 4, sec. 141 and follow- ing), in addition to the deductions from taxable income otherwise allowed such corporation, a special deduction, in computing the taxable income, of an amount equal to the proportion of the taxable income derived from sources within Formosa and Hong Kong (determined without regard to this section and determined in a similar manner to that provided in part I) which the par value of the shares of stock of the corporation owned on the last day of the taxable year by- (1) persons resident in Formosa, Hong Kong, the United States, or possessions of the United States, and (2) individual citizens of the United States wherever resident, bears to the par value of the whole number of shares of stock of the curporation outstanding on such date. In no case shall the diminution, by reason of such special deduction, of the taxes imposed by section 11 (computed without regard to this section) exceed the amount of the special dividend certified under subsection (b) of this section. (b Special dividend The special deduction provided in subsection (a) shall not be allowed unless the Secretary of Commerce has certified to the Secretary of the Treasury (1) the amount which, during the year ending on the date fixed by law for filing the return, the corporation has distributed as a special dividend to or for the benefit of such persons as on the last day of the taxable year were resident in Formosa, Hong Kong, the United States, or possessions of the United States, or were individual citizens of the United States, and owned shares of stock of the corporation; (2) that such special dividend was in addi- tion to all other amounts, payable or to be payable to such persons or for their benefit, by reason of their interest in the corporation; and (3) that such distribution has been made to or for the benefit of such persons ,'n propor- Page 599