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131 STAT. 2195 PUBLIC LAW 115–97—DEC. 22, 2017 (B) by striking ‘‘PARAGRAPHS (2) AND (3)’’ in the heading and inserting ‘‘PARAGRAPH (2)’’. (3) EFFECTIVE DATE.—The amendments made by this sub- section shall apply to transfers after December 31, 2017. SEC. 14103. TREATMENT OF DEFERRED FOREIGN INCOME UPON TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF TAXATION. (a) IN GENERAL.—Section 965 is amended to read as follows: ‘‘SEC. 965. TREATMENT OF DEFERRED FOREIGN INCOME UPON TRANSITION TO PARTICIPATION EXEMPTION SYSTEM OF TAXATION. ‘‘(a) TREATMENT OF DEFERRED FOREIGN INCOME AS SUBPART F INCOME.—In the case of the last taxable year of a deferred foreign income corporation which begins before January 1, 2018, the subpart F income of such foreign corporation (as otherwise determined for such taxable year under section 952) shall be increased by the greater of— ‘‘(1) the accumulated post-1986 deferred foreign income of such corporation determined as of November 2, 2017, or ‘‘(2) the accumulated post-1986 deferred foreign income of such corporation determined as of December 31, 2017. ‘‘(b) REDUCTION IN AMOUNTS INCLUDED IN GROSS INCOME OF UNITED STATES SHAREHOLDERS OF SPECIFIED FOREIGN CORPORA- TIONS WITH DEFICITS IN EARNINGS AND PROFITS.— ‘‘(1) IN GENERAL.—In the case of a taxpayer which is a United States shareholder with respect to at least one deferred foreign income corporation and at least one E&P deficit foreign corporation, the amount which would (but for this subsection) be taken into account under section 951(a)(1) by reason of subsection (a) as such United States shareholder’s pro rata share of the subpart F income of each deferred foreign income corporation shall be reduced by the amount of such United States shareholder’s aggregate foreign E&P deficit which is allocated under paragraph (2) to such deferred foreign income corporation. ‘‘(2) ALLOCATION OF AGGREGATE FOREIGN E&P DEFICIT.— The aggregate foreign E&P deficit of any United States share- holder shall be allocated among the deferred foreign income corporations of such United States shareholder in an amount which bears the same proportion to such aggregate as— ‘‘(A) such United States shareholder’s pro rata share of the accumulated post-1986 deferred foreign income of each such deferred foreign income corporation, bears to ‘‘(B) the aggregate of such United States shareholder’s pro rata share of the accumulated post-1986 deferred for- eign income of all deferred foreign income corporations of such United States shareholder. ‘‘(3) DEFINITIONS RELATED TO E&P DEFICITS.—For purposes of this subsection— ‘‘(A) AGGREGATE FOREIGN E&P DEFICIT.— ‘‘(i) IN GENERAL.—The term ‘aggregate foreign E&P deficit’ means, with respect to any United States share- holder, the lesser of— ‘‘(I) the aggregate of such shareholder’s pro rata shares of the specified E&P deficits of the 26 USC 965. 26 USC 367 note. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00143 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS