PUBLIC LAW 100-647—NOV. 10, 1988 102 STAT. 3713

b) EFFECTIVE DATE.—The amendment made by this section shall 26 USC 4462
:e effect on the date of the enactment of this Act. note.

X 6111. CLARIFICATION OF MEANING OF MANUFACTURE UNDER
TRUCK EXCISE TAX.

a) IN GENERAL.—Paragraph (1) of section 4052(a) of the 1986 Code
fining first retail sale) is amended by striking out "manufacture,
duction" and inserting in lieu thereof "production, manufac-
e".

3) EFFECTIVE DATE.—The amendment made by subsection (a) 26 USC 4052
11 take effect on January 1,1988. note.

F—Foreign Provisions

!. 6126. DUAL RESIDENT COMPANIES. 26 USC 1502

i) GENERAL RULE.—In the case of a transaction which— note'

(1) involves the transfer after the date of the enactment of
this Act by a domestic corporation, with respect to which there
is a qualified excess loss account, of its assets and liabilities to a
foreign corporation in exchange for all of the stock of such
foreign corporation, followed by the complete liquidation of the
domestic corporation into the common parent, and

(2) qualifies, pursuant to Revenue Ruling 87-27, as a reorga-
nization which is described in section 368(a)(l)(F) of the 1986
Code,

n, solely for purposes of applying Treasury Regulation section
>02-19 to such qualified excess loss account, such foreign corpora-
L shall be treated as a domestic corporation in determining
ither such foreign corporation is a member of the affiliated group
tie common parent.
0 TREATMENT OP INCOME OF NEW FOREIGN CORPORATION.—

(1) IN GENERAL.—In any case to which subsection (a) applies,
for purposes of the 1986 Code—

(A) the source and character of any item of income of the
foreign corporation referred to in subsection (a) shall be
determined as if such foreign corporation were a domestic
corporation,

(B) the net amount of any such income shall be treated as
subpart F income (without regard to section 952(c) of the
1986 Code), and

(C) the amount in the qualified excess loss account re-
ferred to in subsection (a) shall—

(i) be reduced by the net amount of any such income,
and

(ii) be increased by the amount of any such income
distributed directly or indirectly to the common parent
described in subsection (a).

(2) LIMITATION.—Paragraph (1) shall apply to any item of
income only to the extent that the net amount of such income
does not exceed the amount in the qualified excess loss account
after being reduced under paragraph (IXC) for prior income.

(3) BASIS ADJUSTMENTS NOT APPLICABLE.—To the extent para-
graph (1) applies to any item of income, there shall be no
increase in basis under section 961(a) of such Code on account of
such income (and there shall be no reduction in basis under