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131 STAT. 2194 PUBLIC LAW 115–97—DEC. 22, 2017 year which includes such transfer an amount equal to the trans- ferred loss amount with respect to such transfer. ‘‘(b) TRANSFERRED LOSS AMOUNT.—For purposes of this section, the term ‘transferred loss amount’ means, with respect to any transfer of substantially all of the assets of a foreign branch, the excess (if any) of— ‘‘(1) the sum of losses— ‘‘(A) which were incurred by the foreign branch after December 31, 2017, and before the transfer, and ‘‘(B) with respect to which a deduction was allowed to the taxpayer, over ‘‘(2) the sum of— ‘‘(A) any taxable income of such branch for a taxable year after the taxable year in which the loss was incurred and through the close of the taxable year of the transfer, and ‘‘(B) any amount which is recognized under section 904(f)(3) on account of the transfer. ‘‘(c) REDUCTION FOR RECOGNIZED GAINS.—The transferred loss amount shall be reduced (but not below zero) by the amount of gain recognized by the taxpayer on account of the transfer (other than amounts taken into account under subsection (b)(2)(B)). ‘‘(d) SOURCE OF INCOME.—Amounts included in gross income under this section shall be treated as derived from sources within the United States. ‘‘(e) BASIS ADJUSTMENTS.—Consistent with such regulations or other guidance as the Secretary shall prescribe, proper adjustments shall be made in the adjusted basis of the taxpayer’s stock in the specified 10-percent owned foreign corporation to which the transfer is made, and in the transferee’s adjusted basis in the property transferred, to reflect amounts included in gross income under this section.’’. (2) CLERICAL AMENDMENT.—The table of sections for part II of subchapter B of chapter 1 is amended by adding at the end the following new item: ‘‘Sec. 91. Certain foreign branch losses transferred to specified 10-percent owned foreign corporations.’’. (3) EFFECTIVE DATE.—The amendments made by this sub- section shall apply to transfers after December 31, 2017. (4) TRANSITION RULE.—The amount of gain taken into account under section 91(c) of the Internal Revenue Code of 1986, as added by this subsection, shall be reduced by the amount of gain which would be recognized under section 367(a)(3)(C) (determined without regard to the amendments made by subsection (e)) with respect to losses incurred before January 1, 2018. (e) REPEAL OF ACTIVE TRADE OR BUSINESS EXCEPTION UNDER SECTION 367.— (1) IN GENERAL.—Section 367(a) is amended by striking paragraph (3) and redesignating paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), respectively. (2) CONFORMING AMENDMENTS.—Section 367(a)(4), as redesignated by paragraph (1), is amended— (A) by striking ‘‘Paragraphs (2) and (3)’’ and inserting ‘‘Paragraph (2)’’, and 26 USC 367. 26 USC 91 note. 26 USC 91 note. 26 USC 71 prec. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00142 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS