PUBLIC LAW 100-647—NOV. 10, 1988	102 STAT. 3511
 (B)	Subsection (b) of section 6046 of the 1986 Code is amended
by striking out "subsection (a)(2)" and inserting in lieu thereof
"paragraph (2) or (3) of subsection (a)".
 (C)	Subsection (a) of section 6046 of the 1986 Code is amended
by adding at the end thereof the following new sentence:
"In the case of a foreign corporation with respect to which any
person is treated as a United States shareholder under section
953(c), paragraph (1) shall be treated as including a reference to each
United States person who is an officer or director of such corpora-
tion/'
(20)	Subparagraph (B) of section 954(c)(l) of the 1986 Code is
amended by striking out the last sentence and inserting in lieu
thereof the following:
"In the case of any regular dealer in property, gains and losses
from the sale or exchange of any such property or arising out of
bona fide hedging transactions reasonably necessary to the
conduct of the business of being a dealer in such property shall
not be taken into account under this subparagraph. Gains and
losses from the sale or exchange of any property which, in the
hands of the controlled foreign corporation, is property de-
scribed in section 1221(1) also shall not be taken into account
under this subparagraph."
(21)	Subsection (c) of section 953 (as amended by this subsec-
tion) is amended by striking out paragraph (7) and inserting in
lieu thereof the following:
"(7) coordination with section 1248.—For purposes of sec-
tion 1248, if any person is (or would be but for paragraph (3))
treated under paragraph (1) as a United States shareholder with
respect to any foreign corporation which would be taxed under
subchapter L if it were a domestic corporation and which is (or
would be but for paragraph (3)) treated under paragraph (1) as a
controlled foreign corporation—
"(A) such person shall be treated as meeting the stock
ownership requirements of section 1248(aX2) with respect to
such foreign corporation, and
"(B) such foreign corporation shall be treated as a con-
trolled foreign corporation.
"(8) regulations.—The Secretary shall prescribe such regu-
lations as may be necessary to carry out the purposes of this
subsection, including—
"(A) regulations preventing the avoidance of this subsec-
tion through cross insurance arrangements or otherwise,
and
"(B) regulations which may provide that a person will not
be treated as a United States shareholder under paragraph
(1) with respect to any foreign corporation if neither such
person (nor any related person to such person) is (directly or
indirectly) insured under any policy of insurance or reinsur-
ance issued by such foreign corporation."
(22)	Subclause (III) of section 952(cXlXBXiu) of the 1986 Code is
amended by striking out "insurance income" and inserting in
lieu thereof "insurance income or foreign personal holding
company income/'.
(23)	Clause (iii) of section 952(cXlXB) of the 1986 Code is
amended   by   redesignating   subclauses   (III)   and   (IV)   as
subclauses (V) and (VI), respectively, and by inserting after
subclause (II) the following new subclauses: