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131 STAT. 2201 PUBLIC LAW 115–97—DEC. 22, 2017 ‘‘(e) SPECIFIED FOREIGN CORPORATION.— ‘‘(1) IN GENERAL.—For purposes of this section, the term ‘specified foreign corporation’ means— ‘‘(A) any controlled foreign corporation, and ‘‘(B) any foreign corporation with respect to which one or more domestic corporations is a United States share- holder. ‘‘(2) APPLICATION TO CERTAIN FOREIGN CORPORATIONS.—For purposes of sections 951 and 961, a foreign corporation described in paragraph (1)(B) shall be treated as a controlled foreign corporation solely for purposes of taking into account the subpart F income of such corporation under subsection (a) (and for purposes of applying subsection (f)). ‘‘(3) 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. ‘‘(f) DETERMINATIONS OF PRO RATA SHARE.— ‘‘(1) IN GENERAL.—For purposes of this section, the deter- mination of any United States shareholder’s pro rata share of any amount with respect to any specified foreign corporation shall be determined under rules similar to the rules of section 951(a)(2) by treating such amount in the same manner as subpart F income (and by treating such specified foreign cor- poration as a controlled foreign corporation). ‘‘(2) SPECIAL RULES.—The portion which is included in the income of a United States shareholder under section 951(a)(1) by reason of subsection (a) which is equal to the deduction allowed under subsection (c) by reason of such inclusion— ‘‘(A) shall be treated as income exempt from tax for purposes of sections 705(a)(1)(B) and 1367(a)(1)(A), and ‘‘(B) shall not be treated as income exempt from tax for purposes of determining whether an adjustment shall be made to an accumulated adjustment account under sec- tion 1368(e)(1)(A). ‘‘(g) DISALLOWANCE OF FOREIGN TAX CREDIT, ETC.— ‘‘(1) IN GENERAL.—No credit shall be allowed under section 901 for the applicable percentage of any taxes paid or accrued (or treated as paid or accrued) with respect to any amount for which a deduction is allowed under this section. ‘‘(2) APPLICABLE PERCENTAGE.—For purposes of this sub- section, the term ‘applicable percentage’ means the amount (expressed as a percentage) equal to the sum of— ‘‘(A) 0.771 multiplied by the ratio of— ‘‘(i) the excess to which subsection (c)(1)(A) applies, divided by ‘‘(ii) the sum of such excess plus the amount to which subsection (c)(1)(B) applies, plus ‘‘(B) 0.557 multiplied by the ratio of— ‘‘(i) the amount to which subsection (c)(1)(B) applies, divided by ‘‘(ii) the sum described in subparagraph (A)(ii). ‘‘(3) DENIAL OF DEDUCTION.—No deduction shall be allowed under this chapter for any tax for which credit is not allowable under section 901 by reason of paragraph (1) (determined by VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00149 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS