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136 STAT. 1823 PUBLIC LAW 117–169—AUG. 16, 2022 applicable financial statement for a group of entities, rules similar to the rules of section 451(b)(5) shall apply. ‘‘(B) CONSOLIDATED RETURNS.—Except as provided in regulations prescribed by the Secretary, if the taxpayer is part of an affiliated group of corporations filing a consoli- dated return for any taxable year, adjusted financial state- ment income for such group for such taxable year shall take into account items on the group’s applicable financial statement which are properly allocable to members of such group. ‘‘(C) TREATMENT OF DIVIDENDS AND OTHER AMOUNTS.— In the case of any corporation which is not included on a consolidated return with the taxpayer, adjusted financial statement income of the taxpayer with respect to such other corporation shall be determined by only taking into account the dividends received from such other corporation (reduced to the extent provided by the Secretary in regula- tions or other guidance) and other amounts which are includible in gross income or deductible as a loss under this chapter (other than amounts required to be included under sections 951 and 951A or such other amounts as provided by the Secretary) with respect to such other cor- poration. ‘‘(D) TREATMENT OF PARTNERSHIPS.— ‘‘(i) IN GENERAL.—Except as provided by the Sec- retary, if the taxpayer is a partner in a partnership, adjusted financial statement income of the taxpayer with respect to such partnership shall be adjusted to only take into account the taxpayer’s distributive share of adjusted financial statement income of such partnership. ‘‘(ii) ADJUSTED FINANCIAL STATEMENT INCOME OF PARTNERSHIPS.—For the purposes of this part, the adjusted financial statement income of a partnership shall be the partnership’s net income or loss set forth on such partnership’s applicable financial statement (adjusted under rules similar to the rules of this sec- tion). ‘‘(3) ADJUSTMENTS TO TAKE INTO ACCOUNT CERTAIN ITEMS OF FOREIGN INCOME.— ‘‘(A) IN GENERAL.—If, for any taxable year, a taxpayer is a United States shareholder of one or more controlled foreign corporations, the adjusted financial statement income of such taxpayer with respect to such controlled foreign corporation (as determined under paragraph (2)(C)) shall be adjusted to also take into account such taxpayer’s pro rata share (determined under rules similar to the rules under section 951(a)(2)) of items taken into account in computing the net income or loss set forth on the applicable financial statement (as adjusted under rules similar to those that apply in determining adjusted financial state- ment income) of each such controlled foreign corporation with respect to which such taxpayer is a United States shareholder. ‘‘(B) NEGATIVE ADJUSTMENTS.—In any case in which the adjustment determined under subparagraph (A) would result in a negative adjustment for such taxable year— Determination. VerDate Sep 11 2014 13:57 Oct 25, 2022 Jkt 029139 PO 00169 Frm 00007 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL169.117 PUBL169 jmbennett on LAP3P8D0R2PROD with Publaw