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107 STAT. 504 PUBLIC LAW 103-66—AUG. 10, 1993 26 use 960 note. (2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall apply to taxable years beginning after September 30,1993. Subpart B—Allocation of Research and Experimental Expenditures SEC. 13234. ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES. 26 use 864. (a) GENERAL RULE.—Subparagraph (B) of section 864(fXl) (relating to allocation of research and experimental expenditures) is Eimended by striking "64 percent" each place it appears and inserting "50 percent". (b) CONFORMING AMENDMENTS.— (1) Subsection (f) of section 864 is amended by striking paragraph (5) and inserting the following new paragraphs: ^5) REGULATIONS.—^The Secretary shall prescribe such regulations as may be appropriate to cany out the purposes of this subsection, including regulations relating to the deter- mination of whether any expenses are attributable to activities conducted in the United States or outside the United States and regulations providing such adjustments to the provisions of this subsection as may be appropriate in the case of cost- sharing arrangements and contract research. "(6) APPLICABILITY.—This subsection shall apply to the tax- payer's first taxable year (beginning on or before August 1, 1994) following the t««payer's last taxable year to which Reve- nue Procedure 92-56 applies or would apply if the taxpayer elected the benefits of such Revenue Procedure." (2) Subpsiragraph (D) of section 864(f)(4) is amended by striking "subparagraph (C)" and inserting "subparagraph (B) or(C)". Subpart C—Other Provisions SEC. 13235. REPEAL OF CERTAIN EXCEPTIONS FOR WORKING CAP- FTAL. (a) PROVISIONS RELATING TO OIL AND GAS INCOME.— (1) AMENDMENTS TO SECTION 907.— (A) Paragraph (1) of section 907(c) is amended by add- ing at the end thereof the following new flush sentence: "Such term does not include any dividend or interest income which is passive income (as defined in section 904(d)(2)(A)).". (B) Paragraph (2) of section 907(c) is amended by add- ing at the end thereof the following new flush sentence: "Such term does not include any dividend or interest income which is passive income (as defined in section 904(dX2)(A)).". (2) SEPARATE APPLICATION OF FOREIGN TAX CREDIT.—Clause (iii) of section 904(dX2XA) is amended by inserting "and" at the end of subclause (II), by striking ", and" at flie end of subclause (III) and inserting a period, and by striking subclause (IV). (3) TREATMENT UNDER SUBPART F.— (A) Paragraph (1) of section 954(g) is amended by adding at the end thereof the following new flush sentence: "Such term shall not include any foreign personal holding company income (as defined in subsection (c)).".