PUBLIC LAW 100-647—NOV. 10,1988	102 STAT. 3503
"PART I—SOURCE RULES AND OTHER GENERAL
RULES RELATING TO FOREIGN INCOME".
(D) The table of parts for subchapter N of chapter 1 of the
1986 Code is amended by striking out the item relating to part I
and inserting in lieu thereof the following:
"Part I. Source rules and other general rules relating to foreign income."
(3) Paragraph (3) of section 864(e) of the 1986 Code is amended
by striking out the last sentence and inserting in lieu thereof
the following: "A similar rule shall apply in the case of the
portion of any dividend (other than a qualifying dividend as
defined in section 243(b)) equal to the deduction allowable under
section 243 or 245(a) with respect to such dividend and in the
case of a like portion of any stock the dividends on which would
be so deductible and would not be qualifying dividends (as so
defined)/'
(4XA) Paragraph (5) of section 864(e) of the 1986 Code is
amended by adding at the end thereof the following new
subparagraph:
"(D) treatment of bank holding companies.—To the
extent provided in regulations—
"(i) a bank holding company (within the meaning of
section 2(a) of the Bank Holding Company Act of 1956),
and
"(ii) any subsidiary of a financial institution de-
scribed in section 581 or 591 or of any bank holding
company if such subsidiary is predominantly engaged
(directly or indirectly) in the active conduct of a bank-
ing, financing, or similar business,
shall be treated as a corporation described in subparagraph
(0."
(B) Subparagraph (B) of section 864(e)(5) of the 1986 Code is
amended by adding at the end thereof the following new sen-
tence: "This subparagraph shall not apply for purposes of para-
graph (6)."
(5) Paragraph (6) of section 864(e) of the 1986 Code is amended
by striking out "directly allocable and apportioned" and insert-
ing in lieu thereof "directly allocable or apportioned*'.
(6XA) Paragraph (7) of section 864(e) of the 1986 Code is
amended by striking out "and" at the end of subparagraph (B),
by striking out the period at the end of subparagraph (C) and
inserting in lieu thereof a comma, and by adding at the end
thereof the following new subparagraphs:
"(D) for direct allocation of interest expense in the case of
indebtedness resulting in a disallowance under section
246A,
"(E) for appropriate adjustments in the application of
paragraph (3) in the case of an insurance company, and
"(F) that this subsection shall not apply for purposes of
any provision of this subchapter to the extent the Secretary
determines that the application of this subsection for such
purposes would not be appropriate/'
(B) Subsection (e) of section 864 of the 1986 Code is amended
by striking out "(except as provided in regulations)" in the
material preceding paragraph (1).