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131 STAT. 2189 PUBLIC LAW 115–97—DEC. 22, 2017 Subtitle D—International Tax Provisions PART I—OUTBOUND TRANSACTIONS Subpart A—Establishment of Participation Exemption System for Taxation of Foreign Income SEC. 14101. DEDUCTION FOR FOREIGN-SOURCE PORTION OF DIVI- DENDS RECEIVED BY DOMESTIC CORPORATIONS FROM SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA- TIONS. (a) IN GENERAL.—Part VIII of subchapter B of chapter 1 is amended by inserting after section 245 the following new section: ‘‘SEC. 245A. DEDUCTION FOR FOREIGN SOURCE-PORTION OF DIVI- DENDS RECEIVED BY DOMESTIC CORPORATIONS FROM SPECIFIED 10-PERCENT OWNED FOREIGN CORPORA- TIONS. ‘‘(a) IN GENERAL.—In the case of any dividend received from a specified 10-percent owned foreign corporation by a domestic corporation which is a United States shareholder with respect to such foreign corporation, there shall be allowed as a deduction an amount equal to the foreign-source portion of such dividend. ‘‘(b) SPECIFIED 10-PERCENT OWNED FOREIGN CORPORATION.— For purposes of this section— ‘‘(1) IN GENERAL.—The term ‘specified 10-percent owned foreign corporation’ means any foreign corporation with respect to which any domestic corporation is a United States share- holder with respect to such corporation. ‘‘(2) EXCLUSION OF PASSIVE FOREIGN INVESTMENT COMPA- NIES.—Such term shall not include any corporation which is a passive foreign investment company (as defined in section 1297) with respect to the shareholder and which is not a controlled foreign corporation. ‘‘(c) FOREIGN-SOURCE PORTION.—For purposes of this section— ‘‘(1) IN GENERAL.—The foreign-source portion of any divi- dend from a specified 10-percent owned foreign corporation is an amount which bears the same ratio to such dividend as— ‘‘(A) the undistributed foreign earnings of the specified 10-percent owned foreign corporation, bears to ‘‘(B) the total undistributed earnings of such foreign corporation. ‘‘(2) UNDISTRIBUTED EARNINGS.—The term ‘undistributed earnings’ means the amount of the earnings and profits of the specified 10-percent owned foreign corporation (computed in accordance with sections 964(a) and 986)— ‘‘(A) as of the close of the taxable year of the specified 10-percent owned foreign corporation in which the dividend is distributed, and ‘‘(B) without diminution by reason of dividends distrib- uted during such taxable year. ‘‘(3) UNDISTRIBUTED FOREIGN EARNINGS.—The term ‘undis- tributed foreign earnings’ means the portion of the undistrib- uted earnings which is attributable to neither— 26 USC 245A. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00137 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS