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TITLE 26-INTERNAL REVENUE CODE which holds assets described in the preceding sentence, but only to the extent that such assets are so used. (2) Qualified investments by related persons For purposes of determining the amount of qualified investments in foreign based compa- ny shipping operations, an investment (or a decrease in investment) in such operations by one or more controlled foreign corporations may, under regulations prescribed by the Sec- retary, be treated as an investment (or a de- crease in investment) by another corporation which is a controlled foreign corporation and is a related person (as defined in section 954(d)(3) with respect to the corporation ac- tually making or withdrawing the investment. (3) Special rule For purposes of this subpart, a United States shareholder of a controlled foreign corporation may, under regulations pre- scribed by the Secretary, elect to make the determinations under subsection (a)(2) of this section. and under subsection (g) of section 954 as of the close of the years following the years referred to in such subsections, or as of the close of such longer period of time as such regulations may permit, in lieu of on the last day of such years. Any election under this paragraph made with respect to any tax- able year shall apply to such year and to all succeeding taxable years unless the Secretary consents to the revocation of such election. (4) Amount attributable to property The amount taken into account under this subpart with respect to any property de- scribed in paragraph (1) shall be its adjusted basis, reduced by any liability to which such property is subject. (5) Income excluded under prior law Amounts invested in less developed country corporations described in section 955(c)(2) (as in effect before the enactment of the Tax Re- duction Act of 1975) shall be treated as quali- fied investments in foreign base company shipping operations and shall not be treated as investments in less developed countries for purposes of section 951(a)(1)(A)(ii). (Added Pub. L. 94-12, title V1, § 602(d)(3)(A), Mar. 29, 1975, 89 Stat. 62, and amended Pub. L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) REFERENCES IN TEXT Section 955(c)(2) (as in effect before the enactment of the Tax Reduction Act of 1975), referred to in sub- secs. (a)(2) and (b)(5), refers to section 955(c)(2) as added by Pub. L. 87-834, § 12(a), Oct. 16, 1962, 76 Stat. 1013 and as in effect from 1962 until the repeal of that section and the enactment of this section by Pub. L. 94-12. The Tax Reduction Act of 1975, referred to In sub- secs. (a)(2) and (b)(5), is Pub. L. 94-12, Mar. 29, 1975, 89 Stat. 26, which was enacted Mar. 29, 1975. For com- plete classification of this Act to the Code, see Short Title of 1975 Amendment note set out under section 1 of this title and Tables volume. PRIOR PROVISIONS A prior section 955, added Pub. L. 87-834, § 12(a), Oct. 16, 1962, 76 Stat. 1013, covering investments in less developed countries and dealing with less devel- oped country corporations, was repealed by Pub. L. 94- 12, title VI, § 602(c)(5), Mar. 29, 1975, 89 Stat. 59. AMEN MENTrS 1976-Subsec. (b). Pub. L. 94-455 struck out "or his delegate" following "Secretary" once in par. (2), and twice in par. (3). EFFECTIVE DATE Section 602(f) of Pub. L. 94-12 provided that: "The amendments made by this section [enacting this sec- tion, amending sections 851, 902, 951, and 954 of this title, and repealing section 963 and former section 955 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 1975, and to taxable years of United States shareholders (within the meaning of 951(b) of the Internal Revenue Code of 1954 [section 951(b) of this title]) within which or with which such taxable years of such foreign corpo. rations end." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 902, 951, 954, 956, 958, 964, 970 of this title. § 956. Investment of earnings in United States prop- erty (a) General rules For purposes of this subpart- (1) Amount of investment The amount of earnings of a controlled for- eign corporation invested in United States property at the close of any taxable year is the aggregate amount of such property held, directly or indirectly, by the controlled for- eign corporation at the close of the taxable year, to the extent such amount would have constituted a dividend (determined after the application of section 955(a)) if it had been distributed. (2) Pro rata share of increase for year In the case of any United States share- holder, the pro rata share of the increase for any taxable year in the earnings of a con- trolled foreign corporation invested in United States property is the amount determined by subtracting his pro rata share of- (A) the amount determined under para- graph (1) for the close of the preceding tax- able year, reduced by amounts paid during such preceding taxable year to which sec- tion 959(c)(1) applies, from (B) the amount determined under para- graph (1) for the close of the taxable year. The determinations under subparagraphs (A) and (B) shall be made on the basis of stock owned (within the meaning of section 958(a)) by such Udited States shareholder on the last day during the taxable year on which the for- eign corporation is a controlled foreign corpo- ration. (3) Amount attributable to property The amount taken into account under para- graph (1) or (2) with respect to any property shall be its adjusted basis, reduced by any li- ability to which the property is subject. (b) United States property defined (1) In general For purposes of subsection (a), the term "United States property" means any property acquired after December 31, 1962, which is- § 95C Page 608