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TITLE 26-INTERNAL REVENUE CODE (2) Overall limitation The reduction under paragraph (1) for any taxable years shall not exceed an amount which bears the same ratio to the increase in the Investments in export trade assets (as de- fined in section 971(c)) of such corporation for such year as the export trade income which constitutes foreign base company income of such corporation for such year bears to the entire export trade income of such corporation for such year. (b) Inclusion of certain previously excluded amounts Each United States shareholder of a con- trolled foreign corporation which for any prior taxable year was an export trade corporation shall include in his gross Income under section 951(a)(1)(A)(ii), as an amount to which section 955 (relating to withdrawal of previously ex- cluded subpart F income from qualified invest- ment) applies, his pro rata share of the amount of decrease in the investments in export trade assets of such corporation for such year, but only to the extent that his pro rata share of such amount does not exceed an amount equal to- (1) his pro rata share of the sum of (A) the amounts by which the subpart F income of such corporation was reduced for all prior taxable years under subsection (a), and (B) the amounts not included in subpart F income (determined without regard to this subpart) for all prior taxable years by reason of the treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more con- trolled foreign corporations which are export trade corporations as a single controlled for- eign corporation, reduced by (2) the sum of the amounts which were in- cluded in his gross income under section 951(a)(1)(A)(ii) under the provisions of this subsection for all prior taxable years. (c) Investments in export trade assets (1) Amount of Investments For purposes of this section, the amount taken into account with respect to any export trade asset shall be its adjusted basis, reduced by any liability to which the asset is subject. (2) Increase in investments in export trade assets. For purposes of subsection (a), the amount of increase in investments in export trade assets of any controlled foreign corporation for any taxable year is the amount by which- (A) the amount of such investments at the close of the taxable year, exceeds (B) the amount of such investments at the close of the preceding taxable year. (3) Decrease In investments in export trade assets. For purposes of subsection (b), the amount of decrease in investments in export trade assets of any controlled foreign corporation for any taxable year is the amount by which- (A) the amount of such investments at the close of the preceding taxable year (re- duced by an amount equal to the amount of net loss sustained during the taxable year with respect to export trade assets), exceeds (B) the amount of such investments at the close of the taxable year. (4) Special rule A United States shareholder of an export trade corporation may, under regulations pre- scribed by the Secretary, make the determi- nations under paragraphs (2) and (3) as of the close of the 75th day after the close of the years referred to in such paragraphs in lieu of on the last day of such years. A United States shareholder of an export trade corporation may, under regulations prescribed by the Sec- retary, make the determinations under para- graphs (2) and (3) with respect to export trade assets described in section 971(c)(2) as of the close of the years following the years referred to in such paragraphs, 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 and in lieu of on the day prescribed in the preceding sentence. Any election under this paragraph made with re- spect to any taxable year shall apply to such year and to all succeeding taxable years unless the Secretary consents to the revoca- tion of such election. (Added Pub. L. 87-834, § 12(a), Oct. 16, 1972, 76 Stat. 1027, and amended Pub. L. 94-455, title XIX, §§ 1901(b)(27)(A), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1799, 1834.) REs'mxNcEs IN TEXT The Tax Reform Act of 1976, referred to in subsec. (b)(1), is Pub. L. 94-455, Oct. 4, 1976, 90 Stat. 1250, which was enacted Oct. 4, 1976. Section 972 of this title was repealed by Pub. L. 94-455, title XIX, § 1901(a)(120), Oct. 4, 1976, 90 Stat. 1784. For complete classification of this Act to the Code, see Tables volume. AMENDMENTS 1976-Subsec. (a)(1). Pub. L. 94-455, § 1906(b)(13)(A). struck out "or his delegate" following "Secretary". Subsec. (b)(1). Pub. L. 94-455, § 1901(b)(27)(A), sub- stituted "treatment (under section 972 as in effect before the date of enactment of the Tax Reform Act of 1976) of two or more controlled foreign corpora- tions which are export trade corporations as a single controlled corporation" for "application of section 972" following "reason of the". Subsec. (c)(4). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary" in three places. EFCTIVE DATE OF 1976 AMENDMENT Amendment of subsec. (b)(1) by section 1901(b)(27)(A) 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. EXPORT TRADE CORPORATIONS Section 505(a) and (b) of Pub. L. 92-178, title V, Dec. 10, 1971, 85 Stat. 551, provided as follows: "(a) Use of terms.-Except as otherwise expressly provided, whenever in this section a reference is made to a section, chapter, or other provision, the reference shall be considered to be made to a section, chapter, or other provision of the Internal Revenue Code of 1954 [this title], and terms used in this section shall have the same meaning as when used in such Code. "(b) Transfer to a DISC of assets of export trade corporation. "(1) In general.-If a corporation (hereinafter in this section called 'parent') owns all of the outstand- Page 616 § 970