PUBLIC LAW 100-647—NOV. 10, 1988

102 STAT. 3721

SEC. 6132. VIRGIN ISLANDS TREATED AS QUALIFIED BASIN COUNTRY.

(a) IN GENERAL.—Subparagraph (B) of section 936(d)(4) of the 1986
Code is amended by inserting "and the Virgin Islands" after "sec-
tion 274(h)(6)(A)".

(b) EFFECTIVE DATE.—The amendment made by this section shall 26 USC 936 note.
apply to investments made after the date of the enactment of this

Act.

SEC. 6133. TREATMENT OF CERTAIN UNITED STATES OBLIGATIONS HELD
BY POSSESSION BANKS.

(a) IN GENERAL.—Subsection (e) of section 882 of the 1986 Code is
amended—

(1) by inserting "which is not portfolio interest (as defined in
section 881(c)(2)r before "shall", and

(2) by striking out the last sentence thereof.

(b) EXCLUSION FROM BRANCH PROFITS TAX.—Paragraph (2) of sec-
tion 884(d) of the 1986 Code is amended by striking out "or" at the
end of subparagraph (C), by striking out the period at the end of
subparagraph (D) and inserting in lieu thereof ", or" and by insert-
ing after subparagraph (D) the following new subparagraph:

"(E) income treated as effectively connected with the conduct Business and
of a trade or business within the United States under section industry.
882(e)."

(c) EFFECTIVE DATE.—The amendments made by this subsection 26 use 882 note.
shall apply to taxable years beginning after December 31, 1988.

SEC. 6134. TREATMENT OF CERTAIN GAMBLING WINNINGS RECEIVED BY
NONRESIDENT ALIENS.

(a) EXEMPTION FROM TAX.—

(1) Section 871 of the 1986 Code (relating to tax on non-
resident alien individuals) is amended by redesignating subsec-
tion (j) as subsection (k) and by inserting after subsection (i) the
following new subsection:

"(j) EXEMPTION FOR CERTAIN GAMBLING WINNINGS.—No tax shall
be imposed under paragraph (1XA) of subsection (a) on the proceeds
from a wager placed in any of the following games: blackjack,
baccarat, craps, roulette, or big-6 wheel. The preceding sentence
shall not apply in any case where the Secretary determines by
regulation that the collection of the tax is administratively fea-
sible/'

(2) Subsection (c) of section 1441 of the 1986 Code is amended
by adding at the end thereof the following new paragraph:

"(11) CERTAIN GAMBLING WINNINGS.—No tax shall be required
to be deducted and withheld under subsection (a) from any
amount exempt from the tax imposed by section 871(aXlXA) by
reason of section 871Q)."

(b) EFFECTIVE DATE.—The amendments made by subsection (a) 26 USC 871 note.
shall take effect on the date of the enactment of this Act.

SEC. 6135. ELECTION TO BE TREATED AS DOMESTIC CORPORATION.

(a) IN GENERAL.—Section 953 of the 1986 Code is amended by
adding at the end thereof the following new subsection:

"(d) ELECTION BY FOREIGN INSURANCE COMPANY To BE TREATED AS
DOMESTIC CORPORATION.—

"(1) IN GENERAL.—If—

"(A) a foreign corporation is a controlled foreign corpora-
tion (as defined in section 957(a) by substituting 25 percent