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TITLE 26-INTERNAL REVENUE CODE (D) Allocation of direct production costs For purposes of this paragraph- (I) Compensation for services performed shall be allocated to the country in which the services are performed, except that payments to United States persons for services performed outside the United States shall be allocated to the United States. For purposes of the preceding sen- tence. payments to an electing small busi- ness corporation (within the meaning of section 1371) or a partnership shall be considered payments to a United States person only to the extent that such pay- ments are included in the gross income of a United States person other than an electing small business corporation or partnership. (ii) Amounts for equipment and supplies shall be allocated to the country in which, with respect to the production of the film, the predominant use occurs. (iii) All other items shall be allocated under regulations prescribed by the Secre- tary which are consistent with the alloca- tion principle set forth in clause (ii). (6) United States For purposes of this subsection, the term "United States" includes the possessions of the United States. (1) Cross reference For application of this subpart to certain acquiring corporations, see section 381(c)(23). (Added Pub. L. 87-834, § 2(b), Oct. 16, 1962, 76 Stat. 967, and amended Pub. L. 88-272, title II, § 203(a)(1), (3)(A), (b), (c), Feb. 26, 1964, 78 Stat. 33, 34; Pub. L. 89-800, § 1 Nov. 8, 1966, 80 Stat. 1508; Pub. L. 89-809, title II, § 201(a), Nov. 13, 1966, 80 Stat. 1575; Pub. L. 90-26t §§ 1, 2(a), 3, June 13, 1967, 81 Stat. 57, 58; Pub. L. 91-172, title I § 121(d)(2)(A), title IV, § 401(e)(2)-(4), Dec. 30, 1969, 83 Stat. 547, 603; Pub. L. 92-178, title I, §§ 102(a)(2), 103, 104(a)(1), (b)-(f)(1), (g), 108(b), (c), Dec. 10, 1971, 85 Stat. 490-502, 507; Pub. L. 94-12, title III, §§ 301(c)(1), 302(c)(3), title VI, § 604(a), Mar. 29, 1975, 89 Stat, 38, 44, 65; Pub. L. 94-455, title VIII, §§ 802(b)(6), 804(a), title X, § 1051(h)(1), title XIX, H 1901(a)(5), (b)(11)(A), 1906(b)(13)(A), title XXI, § 2112(a)(1), Oct. 4, 1976, 90 Stat. 1583, 1591, 1647, 1764, 1795, 1834, 1905.) REFERENCES IN TEXT The Interstate Commerce Act, referred to in subsec. (a)(2)(B)(ii), is act Feb. 4, 1887, ch. 104, 24 Stat. 379, as amended. Part I of the Interstate Commerce Act is classified generally to chapter 1 (§ 1 et seq.) of Title 49, Transportation. For complete classification of this Act to the Code, see note captioned Interstate Com- merce Act set out under section 27 of Title 49 and Tables volume. Proclamation 4074, referred to in subsecs. (a)(7)(B)(i), (ii), (D). is Proclamation 4074, Aug. 15, 1971, 36 FR 15724 and is set out as a note preceding section 1202 of Title 19, Customs Duties. The Federal Water Pollution Control Act, referred to in subsec. (h)(12)(B)(ii), is act June 30, 1948, ch. 758, as amended generally by Pub. L. 92-500, § 2, Oct. 18, 1972, 86 Stat. 816. which is classified generally to chapter 26(§ 1251 et seq.) of Title 33, Navigation and Navigable Waters. Section 13(a) of the Federal Water Pollution Control Act was classified to section 1163(a) of Title 33, and was omitted in the general amendment and revision of act June 30, 1948 by Pub. L. 92-500. For complete classification of this Act to the Code, see Short Title note set out under section 1251 of Title 33 and Tables volume. Section 302(b) of the Clean Air Act, referred to in subsec. (h)(12)(C), is classified to section 1857h(b) of Title 42, The Public Health and Welfare. AMENDMENTS 1976-Subsec. (a)(2)(B)(vi). Pub. L. 94-455, § 1901(a)(5)(A), substituted "(43 U.S.C. 1331))" for 43 U.S.C., sec. 1331)". Subsec. (a)(2)(B)(vii). Pub. L. 94-455, § 1051(h)(1), substituted "(other than a corporation which has an election in effect under section 936 or which is entitled to the benefits of section 934(b))" for "(other than a corporation entitled to the benefits of section 931 or 934(b))". Subsec. (a)(2)(B)(viii). Pub. L. 94-455. § 1901(a)(5)(B), substituted "47 U.S.C. 702" for "47 U.S.C., sec. 702". Subsec. (a)(8). Pub. L. 94-455, §§ 1901(b)(11)(A), 2112(a)(1), struck out "169," following "section 167(k),", "187," before "or 188 applies", and provisions relating to the limitation of the applicability of this paragraph on property to which section 169 applies. Subsec. (c)(2)(A). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (d)(1). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (d)(2)(A). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary", Subsec. (f). Pub. L. 94-455, §802(b)(6), substituted "section 46(a)(3)" for "section 46(a)(2)". Subsec. (i)(2). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". Subsec. (k). Pub. L. 94-455, §804(a), added subsec. (k). Former subsec. (k) redesignated (1). Subsec. (1). Pub. L. 94-455, §804(a), redesignated former subsec. (k) as subsec. (1). 1975-Subsec. (a)(2)(B). Pub. L. 94-12, § 604(a), sub. stituted "territorial waters within the northern por- tion of the Western Hemisphere" for "territorial waters" in cl. (x) and added definition of "northern portion of the Western Hemisphere" following cl. (x). Subsec. (c)(2)(A). Pub. L. 94-12 § 301(c)(1)(A), substi- tuted "$100,000" for "$50,000". Subsec. (c)(2)(B). Pub. L. 94-12, § 301(c)(1)(A), (B), substituted "$50,000" for "$25,000" and "$100,000" for "$50,000" Subsec. (c)(2)(C). Pub. L. 94-12, § 301(c)(1)(A), substi- tuted "$100,000" for "$50,000". Subsec. (d)(1). Pub. L. 94-12, § 302(c)(3), substituted "section 46(e)(1)" for "section 46(d)(1)". Subsec. (d)(2)(A). Pub. L. 94-12, § 302(c)(3), substi- tuted "section 46(e)(1)" for "section 46(d)(1)". 1971-Subsec. (a)(1). Pub. I,. 92-178, § 102(a)(2), sub- stituted "3 years" for "4 years" in second sentence. Subsec. (a)(l)(B)(ii), (iii). Pub. L. 92-178, § 104(a)(1), substituted "research facility" for "research or storage facility" in cl. (ii) and added cl. (iii). Subsec. (a)(2)(B). Pub. L. 92-178, § 104(c)(2), (3), (d), added Cls. (viii) to (x), respectively. Subsec. (a)(3)(C). Pub. L. 92-178, § 104(b), added subpar. (C). Subsec. (a)(5). Pub. L. 92-178, § 104(c)(1), inserted "(other than the International Telecommunications Satellite Consortium or any successor organization)" following "international organization". Subsec. (a)(6). Pub. L. 92-178, § 104(e), substituted provisions for treatment of livestock (other than horses) acquired by the taxpayer as section 38 proper- ty, with exception provision for reduction of acquisi- tion cost by amount equal to amount realized on sale or other disposition under certain circumstances, and for nontreatment of horses as section 38 property for former provision that livestock shall not be treated as section 38 property. Subsec. (a)(7) to (9). Pub. L. 92-178, §§ 103, 104(f)(1), (g), added pars. (7) to (9), respectively. Page 76