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TITLE 26-INTERNAL REVENUE CODEP poration for which an election under this subsection is effective, the election shall be terminated and not be in effect for any tax- able year of the corporation after such 5th year. (c) Distributions to meet qualification requirements (1) In general Subject to the conditions provided by para- graph (2), a corporation which for a taxable year does not satisfy a condition specified in paragraph (1)(A) (relating to gross receipts) or (1)(B) (relating to assets) of subsection (a) shall nevertheless be deemed to satisfy such condition for such year if it makes a pro rata distribution of property after the close of the taxable year to its shareholders (designated at the time of such distribution as a distribu- tion to meet qualification requirements) with respect to their stock in an amount which is equal to- (A) if the condition of subsection (a)(1)(A) is not satisfied, the portion of such corpora- tion's taxable income attributable to its gross receipts which are not qualified export receipts for such year, (B) if the condition of subsection (a)(1)(B) is not satisfied, the fair market value of those assets which are not qualified export assets on the last day of such taxable year, or (C) if neither of such conditions is satis- fied, the sum of the amounts required by subparagraphs (A) and (B). (2) Reasonable cause for failure The conditions under paragraph (1) shall be deemed satisfied in the case of a distribution made under such paragraph- (A) if the failure to meet the require- ments of subsection (a)(1)(A) or (B), and the failure to make such distribution prior to the date on which made, are due to rea- sonable cause; and (B) the corporation pays, within the 30- day period beginning with the day on which such distribution is made, to the Secretary, if such corporation makes such distribution after the 15th day of the 9th months after the close of the taxable year, an amount de- termined by multiplying (I) the amount equal to 4 percent of such distribution, by (ii) the number of its taxable years which begin after the taxable year with respect to which such distribution is made and before such distribution is made. For purposes of this title, any payment made pursuant to this paragraph shall be treated as interest. (3) Certain distributions made within 8V months after close of taxable year deemed for reason- able cause A distribution made on or before the 15th day of the 9th month after the close of the taxable year shall be deemed for reasonable cause for purposes of paragraph (2)(A) if- (A) at least 70 percent of the gross re- ceipts of such corporation for such taxable year consist of qualified export receipts, and (B) the adjusted basis of the qualified export assets held by the corporation on the last day of each month of the taxable year equals or exceeds 70 percent of the sum of the adjusted basis of all assets held by the corporation on such day. (d) Ineligible corporations The following corporations shall not be eligi- ble to be treated as a DISC- (1) a corporation exempt from tax by reason of section 501, (2) a personal holding company (as defined in section 542), (3) a financial institution to which section 581 or 593 applies, (4) an Insurance company subject to the tax imposed by subchapter L, (5) a regulated investment company (as de- fined in section 851(a)), (6) a China Trade Act corporation receiving the special deduction provided in section 941(a), or (7) an electing small business corporation (as defined in section 1371(b)). (e) Coordination with personal holding company pro- visions in case of certain produced film rents If- (1) a corporation (hereinafter in this sub- section referred to as "subsidiary") was estab- lished to take advantage of the provisions of this part, and (2) a second corporation (hereinafter in this subsection referred to as "parent") through- out the taxable year owns directly at least 80 percent of the stock of the subsidiary, then, for purposes of applying subsection (d)(2) and section 541 (relating to personal holding company tax) to the subsidiary for the taxable year, there shall be taken into account under section 543(a)(5) (relating to produced film rents) any interest in a film acquired by the parent and transferred to the subsidiary as if such interest were acquired by the subsidiary at the time it was acquired by the parent. (Added Pub. L. 92-178, title V, § 501, Dec. 10, 1971, 85 Stat. 535, and amended Pub. L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) REFERENCES iN TEXT The China Trade Act, referred to in subsec. (d)(6), is act Sept. 19, 1922, ch. 346, 42 Stat. 849, as amended, which is classified generally to chapter 4 § 141 et seq.) of Title 15, Commerce and Trade. For complete classi- fication of this Act to the Code, see section 141 of Title 15 and Tables volume. AMENDMENTS 1976-Subsecs. (a)(2), (b)(1),(3), (c)(2)(B). Pub. L. 94- 455 struck out "or his delegate" following "Secretary" wherever appearing. SECTION RaUtM TO IN OnuM SECTIONS This section is referred to in sections 246, 751, 861, 901, 904, 922, 936, 991, 995, 996, 1504, 6501 of this title. § 993. Definitions (a) Qualified export receipts (1) General rule For purposes of this part, except as pro- vided by regulations under paragraph (2), the qualified export receipts of a corporation are- (A) gross receipts from the sale, exchange, or other disposition of export property, § 993 Page 620