# Pub. L. 89-809: changes to the Internal Revenue Code 1966-11-13, 80 Stat. 1550. Source: . ## Legislative history - Bill: [H.R. 13103](https://www.congress.gov/bill/89th-congress/house-bill/13103) ## § 1: Tax imposed - § 1(d), § 1(e): Pub. L. 89–809 added subsec. (d) and redesignated former subsec. (d) as (e). ## § 11: Tax imposed - § 11: Pub. L. 89–809, § 104(b)(2)(A), struck out par. (4) which made reference to section 881(a) (relating to foreign corporations not engaged in business in United States). - § 11: Pub. L. 89–809, § 104(b)(2)(B), added subsec. (f). ## § 48: Energy credit - § 48(a)(2)(B): Pub. L. 89–809 added cl. (vii). ## § 153: Cross references - § 153(3): Pub. L. 89–809 substituted “873(b)(3)” for “873(d)”. ## § 245: Dividends received from certain foreign corporations - § 245(a): Pub. L. 89–809, § 104(d), (e)(2), substituted “and if 50 percent or more of the gross income of such corporation from all sources for such period is effectively connected with the conduct of a trade or business within the United States” for “and has derived 50 percent or more of its gross income from sources within the United States” in provisions preceding par. (1), “which is effectively connected with the conduct of a trade or business within the United States” for “from sources within the United States” in par. (1), “, which is effectively connected with the conduct of a trade or business within the United States,” for “from sources within the United States” in par. (2), and inserted provisions following par. (2). - § 245(b), § 245(c): Pub. L. 89–809, § 104(e)(1), (3), added subsec. (b), redesignated former subsec. (b) as (c), and substituted therein “subsections (a) and (b)” for “subsection (a)”. ## § 301: Distributions of property - § 301(b)(1): Pub. L. 89–809 substituted “gross income which is effectively connected with the conduct of a trade or business within the United States” for “gross income from sources within the United States” in cl. (i), “gross income which is not effectively connected with the conduct of a trade or business within the United States” for “gross income from sources without the United States” in cl. (ii), and inserted text following cl. (ii) setting out the treatment to be accorded gross income for any period before the first taxable year beginning after December 31, 1966. ## § 334: Basis of property received in liquidations - § 334(b)(2): Pub. L. 89–809, § 202(b), inserted provisions for the determination of the date on which to commence the running of the 12-month period during which the distributee must have acquired the stock by purchase by adding clauses (i) and (ii). - § 334(b): Pub. L. 89–809, § 202(a), inserted provision that, for purposes of par. (2)(B), “purchase” also means an acquisition of stock from a corporation when ownership of such stock would be attributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be attributed was acquired by purchase. ## § 351: Transfer to corporation controlled by transferor - § 351(a): Pub. L. 89–809, § 203(a), inserted “(including, in the case of transfers made on or before June 30, 1967, an investment company)” after “if property is transferred to a corporation”. - § 351(d), § 351(e): Pub. L. 89–809, § 203(b), added subsec. (d) and redesignated former subsec. (d) as (e). ## § 401: Qualified pension, profit-sharing, and stock bonus plans - § 401(a)(10)(A): Pub. L. 89–809, § 204(b)(1)(A), struck out “(determined without regard to section 404(a)(10))” after “deducted under section 404”. - § 401(c)(2)(A): Pub. L. 89–809, § 204(c), struck out “to the extent that such net earnings constitute earned income (as defined in section 911(b) but determined with the application of subparagraph (B))” after “The term ‘earned income’ means the net earnings from self-employment (as defined in section 1402(a))”, added cl. (i) and redesignated former cls. (i) to (ii) as (ii) to (iv), respectively, and struck out references to section 911(b) and subparagraph (B), as in effect for a taxable year beginning on January 1, 1963, in text following cl. (iv). - § 401(c)(2)(B): Pub. L. 89–809, § 204(c), struck out subpar. (B) relating to earned income when both personal services and capital are material income-producing factors. See subsec. (c)(2)(A)(i). - § 401(c)(2)(C): Pub. L. 89–809, § 205(a), added subpar. (C). - § 401(d), § 401(e): Pub. L. 89–809, § 204(b)(1)(B) to (E), struck out “(determined without regard to section 404(a)(10))” wherever appearing. ## § 404: Deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan - § 404(a): Pub. L. 89–809, § 204(a), repealed par. (10) which provided for a special limitation on the amount allowed as a deduction for self-employed individuals. - § 404(e): Pub. L. 89–809, § 204(b)(2), (3), struck out references to par. (10) of subsec. (a) wherever appearing. ## § 512: Unrelated business taxable income - § 512(a): Pub. L. 89–809 substituted “, the unrelated business taxable income shall be its unrelated business taxable income which is effectively connected with the conduct of a trade or business within the United States” for “, the unrelated business taxable income shall be its unrelated business taxable income derived from sources within the United States determined under subchapter N (sec. 861 and following), relating to tax based on income from sources within or without the United States”. ## § 542: Definition of personal holding company - § 542(c)(7): Pub. L. 89–809 substituted requirement that the foreign corporation be other than a corporation which has income to which section 543(a)(7) applies for the taxable year for requirement that the foreign corporation’s gross income from sources within the United States for the period specified in section 861(a)(2)(B) be less than 50 percent of its total gross income from all sources, and expanded the devices included in methods of indirect ownership to encompass foreign estates, foreign trusts, and foreign partnerships. ## § 543: Personal holding company income - § 543(a)(2): Pub. L. 89–809, § 206(b)(1), struck out provision that royalties received for the use of, or for the privilege of using, a patent, invention, model, or design, secret formula, process, or other similar property right be treated as rent if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers and if the amount constituting rent from such leases to customers meets the requirement of subparagraph (A). - § 543(b)(1): Pub. L. 89–809, § 104(h)(2), added subpar. (C). - § 543(b)(2)(D): Pub. L. 89–809, § 206(b)(2), added subpar. (D). - § 543(b)(3): Pub. L. 89–809, § 206(a), struck out “amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4)), nor produced film rents (as defined in subsection (a)(5)(B)).” after “but does not include”, and added subpars. (A) to (D). ## § 545: Undistributed personal holding company income - § 545(a): Pub. L. 89–809, § 104(h)(3)(A), substituted “in the manner provided in subsections (b), (c), and (d)” for “in the manner provided in subsection (b) and (c)” and inserted provisions governing the case of a personal holding company which is a foreign corporation, not more than 10 percent in value of the outstanding stock of which is owned (within the meaning of section 958(a)) during the last half of the taxable year by United States persons. - § 545: Pub. L. 89–809, § 104(h)(3)(B), added subsec. (d). ## § 613: Percentage depletion - § 613(b)(2)(B): Pub. L. 89–809, § 207(a)(1), inserted “clay, laterite, and nephelite syenite” after “anorthosite”. - § 613(b)(3)(B): Pub. L. 89–809, §§ 207(a)(2), 209(a)(2), substituted “if neither paragraph (2)(B), (5), or (6)(B) applies” for “if paragraph (5)(B) does not apply”. - § 613(b)(5): Pub. L. 89–809, § 209(a)(1), added par. (5). Former par. (5) redesignated (6). - § 613(b)(6): Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), redesignated par. (5) as (6), struck out “mollusk shells (including clam shells and oyster shells),”, substituted “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))” for “shale, and stone, except stone described in paragraph (6)” in subpar. (A), and struck out “building or paving brick,” and “sewer pipe,” in subpar. (B). Former par. (6) redesignated (7). - § 613(b)(7): Pub. L. 89–809, §§ 208(a)(2), 209(a)(1), (5), redesignated par. (6) as (7) and inserted “mollusk shells (including clam shells and oyster shells),” after “marble,” and “(other than slate to which paragraph (5) applies)” after “any other such mineral”. - § 613(c)(4)(G): Pub. L. 89–809, § 209(b), substituted “paragraph (5) or (6)(B)” for “paragraph (5)(B)”. ## § 831: Tax on insurance companies other than life insurance companies - § 831(b): Pub. L. 89–809, § 104(i)(6)(A), redesignated subsec. (c) as (b). Former subsec. (b), which excepted foreign insurance companies other than life or mutual insurance companies, foreign mutual marine insurance companies, and foreign mutual fire insurance companies not carrying on an insurance business within the United States and provided that they would be taxable as other foreign corporations, was struck out. - § 831(c), § 831(d): Pub. L. 89–809, § 104(i)(6)(B), redesignated subsec. (d) as (c) and added item (2). Former subsec. (c) redesignated (b). ## § 832: Insurance company taxable income - § 832(d): Pub. L. 89–809 redesignated subsec. (e) as (d). Former subsec. (d), having reference to the taxable income of foreign insurance companies other than life or mutual and foreign mutual marine, was struck out. - § 832(e): Pub. L. 89–809 redesignated subsec. (e) as (d). ## § 834: Determination of taxable investment income - § 834(e), § 834: Pub. L. 89–809 redesignated subsec. (f) as (e). Former subsec. (e), dealing with foreign mutual insurance companies other than life or marine, was struck out. ## § 841: Credit for foreign taxes - § 841: Pub. L. 89–809 substituted “For purposes of the preceding sentence (and for purposes of applying section 906 with respect to a foreign corporation subject to tax under this subchapter), the term ‘taxable income’ as used in section 904” for “For purposes of the preceding sentence, the term ‘taxable income’ as used in section 904”. ## § 842: Foreign companies carrying on insurance business - § 842: Pub. L. 89–809 substituted provisions covering the taxability of foreign corporations that are carrying on an insurance business within the United States which would qualify under part I, II, or III of this subchapter for the taxable year if (without regard to income not effectively connected with the conduct of any trade or business within the United States) it were a domestic corporation for provisions that the gross income of insurance companies subject to the tax imposed by section 802 or 831 shall not be determined in the manner provided in part I of subchapter N (relating to determination of sources of income). ## § 861: Income from sources within the United States - § 861(a)(1)(A): Pub. L. 89–809, § 102(a)(1)(A), substituted “interest on amounts described in subsection (c) received by a nonresident alien individual or a foreign corporation, if such interest is not effectively connected with the conduct of a trade or business within the United States” for “interest on deposits with persons carrying on the banking business paid to persons not engaged in business within the United States”. - § 861(a)(1)(B): Pub. L. 89–809, § 102(a)(2), struck out interest received from a resident foreign corporation, and substituted “gross income from all sources of such individual or such corporation” for “gross income of such resident payor or domestic corporation”, and “taxable year of such individual or such corporation” for “taxable year of such payor”. - § 861(a)(1): Pub. L. 89–809, § 102(a)(2), added subpars. (C), (D), and (F), and redesignated former subpar. (C) as (E). - § 861(a)(2)(B): Pub. L. 89–809, § 102(b), substituted “50 percent of the gross income from all sources” for “50 percent of the gross income”, “effectively connected with the conduct of a trade or business within the United States” for “derived from sources within the United States as determined from the provisions of this part”, and “ratio to such dividends as the gross income of the corporation for such period which was effectively connected with the conduct of a trade or business within the United States bears to its gross income from all sources” for “ratio to such dividends as the gross income of the corporation for such period derived from sources within the United States bears to its gross income from all sources” and inserted “(other than dividends for which a deduction is allowable under section 245(b))” after “dividends” and “(and only to the extent)” after “extent”. - § 861(a)(3)(C)(ii): Pub. L. 89–809, § 102(c), inserted “an individual who is a citizen or resident of the United States, a domestic partnership, or” before “a domestic corporation” and “individual, partnership, or” after “United States by such”. - § 861(c), § 861(d): Pub. L. 89–809, § 102(a)(1)(B), (3), added subsecs. (c) and (d). ## § 864: Definitions and special rules - § 864: Pub. L. 89–809 designated existing provisions as subsec. (a) and added subsecs. (b) and (c). ## § 871: Tax on nonresident alien individuals - § 871(a), § 871(b): Pub. L. 89–809 consolidated the substance of former subsecs. (a) to (c) and, as part of the consolidation, revised the overall income tax treatment of nonresident alien individuals by substituting provisions dividing their income for tax purposes into two basic groups according to whether or not the income is effectively connected with a United States trade or business for provisions calling for different tax treatment based upon whether or not they are, or are not, engaged in a trade or business in the United States, with a further breakdown of those not engaged in trade or business in the United States as to whether their income is over or under $21,200. - § 871(c): Pub. L. 89–809 redesignated subsec. (d) as (c) and inserted provisions that any income described in section 1441(b)(1) or (2) which is received by such individual shall, to the extent derived from sources within the United States, be treated as effectively connected with the conduct of a trade or business within the United States. Substance of former subsec. (c) revised and incorporated into subsecs. (a) and (b). - § 871(d), § 871(e), § 871(f): Pub. L. 89–809 added subsecs. (d) to (f) and redesignated former subsecs. (d) and (e) as (c) and (g), respectively. - § 871(g): Pub. L. 89–809 redesignated former subsec. (e) as (g), added pars. (2) and (4) to (6), and redesignated former pars. (1) and (2) as (3) and (1), respectively. ## § 872: Gross income - § 872(a): Pub. L. 89–809, § 103(b)(1), limited the inclusion of gross income which is derived from sources within the United States to such income which is not effectively connected with the conduct of a trade or business within the United States and inserted provision including gross income without the limitation as to source which is effectively connected with the conduct of a trade or business within the United States. - § 872(b)(3)(B): Pub. L. 89–809, § 103(b)(2), substituted “by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States” for “by a domestic corporation”. - § 872(b)(4): Pub. L. 89–809, § 102(b)(3), added par. (4). ## § 873: Deductions - § 873: Pub. L. 89–809 amended section generally, substituting “connected with income which is effectively connected with the conduct of a trade or business within the United States” for “connected with income from sources within the United States” in subsec. (a), striking out provisions relating to the deduction of losses not connected with a trade or business but incurred in transactions entered into for profit in subsec. (b), making the casualty loss deduction available even if the property giving rise to the loss is not effectively connected with the conduct of a trade or business in the United States if the property is located in this country, making the charitable contribution deduction available even though not related to the trade or business, and adding subsec. (c)(2) making a cross reference to section 906(b)(1) for rule that certain foreign taxes are not to be taken into account in determining deduction or credit. ## § 874: Allowance of deductions and credits - § 874(a): Pub. L. 89–809, § 103(d), struck out “of his total income received from all sources in the United States” after “true and accurate return”. - § 874(c): Pub. L. 89–809, § 106(a)(3), substituted “Foreign tax credit” for “Foreign tax credit not allowed” in heading and inserted reference to an exception provided in section 906. ## § 875: Partnerships; beneficiaries of estates and trusts - § 875: Pub. L. 89–809 designated existing provisions as par. (1), substituted reference to nonresident alien individuals or foreign corporations for reference simply to nonresident alien individuals, and added par. (2). ## § 877: Expatriation to avoid tax - Enacted 26 U.S.C. § 877. ## § 878: Foreign educational, charitable, and certain other exempt organizations ## § 881: Tax on income of foreign corporations not connected with United States business - § 881(a): Pub. L. 89–809 substantially revised the income tax treatment of foreign corporations, substituted the concept of amounts received from sources within the United States by foreign corporations but not effectively connected with the conduct of a trade or business within the United States for the concept of amounts received from sources within the United States by foreign corporations not engaged in trade or business within the United States as the amount upon which the existing 30 percent levy should be imposed, and added contingent income received from the sale of patents and other intangibles and amounts of original issue discount which are treated as ordinary income received on retirement or sale or exchange of bonds or other evidences of indebtedness issued after Sept. 28, 1965, to the specified types of fixed or determinable income. ## § 882: Tax on income of foreign corporations connected with United States business - § 882: Pub. L. 89–809 substantially revised the income tax treatment of foreign corporations, introduced the concept of taxable income effectively connected with the conduct of a trade or business within the United States into provisions dealing with the imposition of tax, substituted a concept of gross income that included gross income derived from sources within the United States not effectively connected with the conduct of a trade or business within the United States and gross income effectively connected with the conduct of a trade or business within the United States for a concept of gross income that included only gross income from sources within the United States, and inserted provisions for an election to treat real property income as income connected with United States business, treatment of interest on United States obligations received by banks organized in possessions, and the returns of tax by agents, and inserted cross reference to section 906(b)(1). ## § 885: Cross references - § 885(1): Pub. L. 89–809 redesignated par. (4) as (1). Former par. (1) redesignated (6). - § 885(2): Pub. L. 89–809 redesignated par. (3) as (2) and substituted “foreign corporations carrying on an insurance business within the United States, see section 842” for “foreign insurance companies, see subchapter L (sec. 801 and following)”. Former par. (2) redesignated (3). - § 885(3): Pub. L. 89–809 redesignated former par. (2) as (3) and, in par. (3) as so redesignated, substituted “section 864(b)” for “section 871(c)”. Former par. (3) redesignated (2). - § 885(4), § 885(5): Pub. L. 89–809 added pars. (4) and (5). Former par. (4) redesignated (1). - § 885: Pub. L. 89–809 redesignated former par. (1) as (6). ## § 894: Income affected by treaty - § 894: Pub. L. 89–809 designated existing provisions as subsec. (a), added subsec. (b), and substituted “affected by treaty” for “exempt under treaty” in section catchline. ## § 895: Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits - § 895: Pub. L. 89–809 exempted income derived from obligations of agencies or instrumentalities of the United States and income derived from interest on deposits with persons carrying on the banking business, inserted “(including beneficial interests, participations, and other instruments issued under section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717)),” and inserted sentence requiring the Bank for International Settlements to be treated as a foreign central bank of issue. ## § 896: Adjustment of tax on nationals, residents, and corporations of certain foreign countries - Enacted 26 U.S.C. § 896. ## § 901: Taxes of foreign countries and of possessions of United States - § 901(b)(3): Pub. L. 89–809, § 106(b)(1), struck out provisions which made the allowance of the credit dependent upon whether the foreign country of which the alien resident was a citizen or subject, in imposing such taxes, allowed a similar credit to citizens of the United States residing in such country. - § 901(b)(4), § 901(b)(5): Pub. L. 89–809, § 106(a)(4), (5), added par. (4), redesignated former par. (4) as (5) and inserted reference to par. (4). - § 901(c), § 901(d), § 901(e): Pub. L. 89–809, § 106(b)(2), added subsec. (c) and redesignated former subsecs. (c) and (d) as (d) and (e), respectively. ## § 904: Limitation on credit - § 904(f)(2): Pub. L. 89–809 inserted reference to includible corporations in an affiliated group, as defined in section 1504, of which the taxpayer is a member and inserted reference to both direct and indirect ownership in subpar. (C) and inserted provision that, for purposes of subpar. (C), stock owned directly or indirectly by or for a foreign corporation shall be considered as being proportionately owned by its shareholders. ## § 906: Nonresident alien individuals and foreign corporations - Enacted 26 U.S.C. § 906. ## § 911: Citizens or residents of the United States living abroad - § 911(d): Pub. L. 89–809 designated existing text as par. (1) and added par. (2). ## § 931: Income from sources within Guam, American Samoa, or the Northern Mariana Islands - § 931: Subsec (d). Pub. L. 89–809 made applicable to United States citizens and domestic corporations engaged in trade or business in possessions, who qualify for the special tax treatment of income qualifying for the exclusion relating to income from United States possessions, provisions which allow deductions to nonresident aliens or foreign corporations engaged in trade or business in the United States by allowing deductions only where they are allocable to income effectively connected with the trade or business in the United States and by spelling out the exceptions allowing deductions whether or not connected with income from sources within the United States in the case of losses not connected with the trade or business but incurred in transactions entered into for profit, casualty losses, and charitable contributions. ## § 952: Subpart F income defined - § 952(b): Pub. L. 89–809 substituted “In the case of a controlled foreign corporation, subpart F income does not include any item of income from sources within the United States which is effectively connected with the conduct by such corporation of a trade or business within the United States unless such item is exempt from taxation (or is subject to a reduced rate of tax) pursuant to a treaty obligation of the United States” for “Subpart F income does not include any item includible in gross income under this chapter (other than this subpart) as income derived from sources within the United States of a foreign corporation engaged in trade or business in the United States”. ## § 953: Insurance income - § 953(b)(3): Pub. L. 89–809 substituted “832(c)(5)” for “832(b)(5)”. ## § 1234: Options to buy or sell - § 1234(c), § 1234: Pub. L. 89–809 added subsec. (c) and redesignated former subsec. (c) as (d). ## § 1248: Gain from certain sales or exchanges of stock in certain foreign corporations - § 1248(d)(4): Pub. L. 89–809 provided that for taxable years beginning after December 31, 1966, the earnings and profits of the foreign corporation, for purposes of this section, is not to include income effectively connected with the conduct of a trade or business within the United States, and inserted provision that the exclusion does not apply to income which is exempt from tax or subject to a reduced rate of tax pursuant to a treaty. ## § 1249: Gain from certain sales or exchanges of patents, etc., to foreign corporations - § 1249(a): Pub. L. 89–809 substituted “Gain” for “Except as provided in subsection (c), gain”. ## § 1382: Taxable income of cooperatives - § 1382(a): Pub. L. 89–809, § 211(a)(1), inserted reference to amounts paid to patrons as a per-unit retain allocation as defined in section 1388(f). - § 1382(b): Pub. L. 89–809, § 211(a)(2), inserted “and per-unit retain allocations” in heading, added pars. (3) and (4), and, in text following par. (4), inserted provisions making existing text applicable only to amounts described in pars. (1) and (2) and inserted text covering the treatment of amounts described in pars. (3) and (4). - § 1382(e): Pub. L. 89–809, § 211(a)(3), inserted provision that the marketing of products shall be treated as occurring during any of the taxable years in which the pool is open. - § 1382(f): Pub. L. 89–809, § 211(a)(4), substituted “paragraphs (1) and (2) of subsection (b)” for “subsection (b)”. ## § 1383: Computation of tax where cooperative redeems nonqualified written notices of allocation or nonqualified per-unit retain certificates - § 1383: Pub. L. 89–809, § 211(a)(5), inserted “or nonqualified per-unit retain certificates” in section catchline. - § 1383(a): Pub. L. 89–809, § 211(a)(6), substituted “section 1382(b)(2) or (4)” for “1382(b)(2)” and inserted references to per-unit retain certificates. - § 1383(b)(2): Pub. L. 89–809, § 211(a)(7), substituted “section 1382(b)(2) or (4)” for “section 1382(b)(2)” and inserted references to per-unit retain certificates. ## § 1385: Amounts includible in patron’s gross income - § 1385(a)(3): Pub. L. 89–809, § 211(b)(1), added par. (3). - § 1385(c): Pub. L. 89–809, § 211(b)(2)–(4), inserted “and certain nonqualified per-unit retain certificates” in heading, inserted provisions to par. (1) for the application of the subsection to any nonqualified per-unit retain certificates which were paid as per-unit retain allocations, and inserted references to per-unit retain certificates in par. (2). ## § 1388: Definitions; special rules - § 1388(e): Pub. L. 89–809, § 211(c)(1), inserted references to per-unit retain certificates. - § 1388(f), § 1388(g), § 1388(h), § 1388(i): Pub. L. 89–809, § 211(c)(2), added subsecs. (f) to (i). ## § 1441: Withholding of tax on nonresident aliens - § 1441(a): Pub. L. 89–809, § 103(h)(1), substituted “or of any foreign partnership” for “, or of any partnership not engaged in trade or business within the United States and composed in whole or in part of nonresident aliens,”. - § 1441(b): Pub. L. 89–809, § 103(h)(2)–(4), struck out “(except interest on deposits with persons carrying on the banking business paid to persons not engaged in business in the United States)” after “The items of income referred to in subsection (a) are interest” and substituted “gains described in section 402(a)(2), 403(a)(2), or 631(b) or (c), amounts subject to tax under section 871(a)(1)(C), gains subject to tax under section 871(a)(1)(D), and gains on transfers described in section 1235 made on or before October 4, 1966” for “and amounts described in section 402(a)(2), section 403(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets” in text preceding par. (1), and inserted provision for treatment of items of income referred to in subsec. (a) in the case of nonresident alien individuals who are members of domestic partnerships. - § 1441(c)(1): Pub. L. 89–809, § 103(h)(5), substituted “in the case of any item of income (other than compensation for personal services) which is effectively connected with the conduct of a trade or business within the United States and which is included in the gross income of the recipient under section 871(b)(2) for the taxable year” for “in the case of dividends paid by a foreign corporation unless (A) such corporation is engaged in trade or business within the United States, and (B) more than 85 percent of the gross income of such corporation for the 3-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the United States as determined under part I of subchapter N of chapter 1” after “shall be required”. - § 1441(c)(4): Pub. L. 89–809, § 103(h)(6), struck out provisions which had served to limit to compensation for personal services of nonresident alien individuals who enter and leave the United States at frequent intervals and of nonresident alien individuals for the period they are temporarily present in the United States as a nonimmigrant under subparagraph (F) and (J) of section 101(a)(15) of the Immigration and Nationality Act, as amended, the application of the exemption from deduction and withholding under subsec. (a), leaving the exemption under subsec. (a) applicable to compensation for personal services without further limitation. - § 1441(c)(5): Pub. L. 89–809, § 103(h)(7), substituted “gains described in section 402(a)(2), 403(a)(2), or 631(b) or (c), gains subject to tax under section 871 (a)(1)(D), and gains on transfers described in section 1235 made on or before October 4, 1966,” for “amounts described in section 402(a)(2), section 403(a)(2), section 631(b) and (c), and section 1235, which are considered to be gains from the sale or exchange of capital assets,” and “amounts payable,” for “proceeds from such sale or exchange,”. - § 1441(c)(7): Pub. L. 89–809, § 103(h)(8), added par. (7). - § 1441(d), § 1441(e): Pub. L. 89–809, § 103(h)(9), added subsec. (d) and redesignated former subsec. (d) as (e). ## § 1442: Withholding of tax on foreign corporations - § 1442: Pub. L. 89–809 limited the withholding of tax at the 30 percent rate to items of fixed or determinable United States source income not effectively connected with the conduct of a trade or business in the United States and authorized the granting of an exemption from the withholding requirement in the case of a foreign corporation engaged in trade or business within the United States if the Secretary or his delegate determines that the withholding imposes an undue administrative burden and that the collection of the tax will not be jeopardized by the exemption. ## § 1461: Liability for withheld tax - § 1461: Pub. L. 89–809 struck out requirement that persons required to deduct and withhold any tax under this chapter make return thereof on or before March 15 of each year and pay the tax to the officer designated in section 6151, and substituted “Liability for withheld tax” for “Return and payment of withheld tax” in section catchline. ## § 2014: Credit for foreign death taxes - § 2014(a): Pub. L. 89–809 struck out provision that, if the decedent at the time of his death was not a citizen of the United States, credit would not be allowed under this section unless the foreign country of which the decedent was a citizen or subject, in imposing estate, inheritance, legacy, or succession taxes, allows a similar credit in the case of a citizen of the United States resident in such country. - § 2014(h): Pub. L. 89–809 added subsec. (h). ## § 2101: Tax imposed - § 2101(a): Pub. L. 89–809 substituted table to be used in computing the tax imposed on transfer of taxable estate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States for provisions sending taxpayer to table in section 2001 for computation of tax imposed. ## § 2102: Credits against tax - § 2102: Pub. L. 89–809 redesignated existing provisions as subsec. (a), inserted reference to special limitation provided in subsec. (b), and added subsec. (b). ## § 2104: Property within the United States - § 2104(c): Pub. L. 89–809 added subsec. (c). ## § 2105: Property without the United States - § 2105(b): Pub. L. 89–809 substituted amounts described in section 861(c) if any interest thereon, were such interest received by the decedent at the time of his death, would be treated by reason of section 861(a)(1)(A) as income from sources without the United States, and deposits with a foreign branch of a domestic corporation or domestic partnership, if such branch is engaged in the commercial banking business for moneys deposited with any person carrying on the banking business by or for a nonresident not a citizen of the United States who was not engaged in business in the United States at the time of his death as the property not to be deemed property within the United States for purposes of this subchapter. ## § 2106: Taxable estate - § 2106(a)(3): Pub. L. 89–809 substituted “$30,000” for “$2,000” as size of exemption in subpar. (A) and “$30,000” for “$2,000” as item (i) in formula set out in subpar. (B). ## § 2107: Expatriation to avoid tax - Enacted 26 U.S.C. § 2107. ## § 2108: Application of pre-1967 estate tax provisions - Enacted 26 U.S.C. § 2108. ## § 2501: Imposition of tax - § 2501(a): Pub. L. 89–809 redesignated existing provisions as par. (1), struck out “, except transfers of intangible property by a nonresident not a citizen of the United States and who was not engaged in business in the United States during such calendar year” after “resident or nonresident”, and added pars. (2) to (4). ## § 2511: Transfers in general - § 2511(b): Pub. L. 89–809 inserted reference to nonresidents who are excepted from the application of section 2501(a)(2) and expanded section to include debt obligations of United States persons or the United States, a State or any political subdivision thereof, or the District of Columbia. ## § 3401: Definitions - § 3401(a)(6), § 3401(a)(7): Pub. L. 89–809, § 103(k), struck out par. (6) dealing with services performed by nonresident alien individuals other than residents of contiguous countries who enter and leave the United States at frequent intervals, residents of Puerto Rico if such services are performed as an employee of the United States or any agency thereof, or individuals temporarily present in the United States as nonimmigrants under certain conditions, redesignated par. (7) as (6), and in par (6) as so redesignated, struck out “who is a resident of a contiguous country and who enters and leaves the United States at frequent intervals” after “nonresident alien individual”. ## § 6018: Estate tax returns - § 6018(a)(2): Pub. L. 89–809 substituted “$30,000” for “$2,000”. ## § 6044: Returns regarding payments of patronage dividends - § 6044(b)(1): Pub. L. 89–809, § 211(d)(1), added subpars. (D) and (E). - § 6044(d): Pub. L. 89–809, § 211(d)(2), inserted references to qualified per-unit retain certificates. ## § 6096: Designation by individuals - Enacted 26 U.S.C. § 6096. ## § 6501: Limitations on assessment and collection - § 6501(b): Pub. L. 89–809 substituted “chapter 3, 21, or 24” for “chapter 21 or 24” in text of pars. (1) and (2) and inserted “and tax imposed by chapter 3” after “taxes” in par. (2) heading. ## § 6513: Time return deemed filed and tax considered paid - § 6513(b): Pub. L. 89–809, § 105(f)(1), designated existing provisions as pars. (1) and (2) and added par. (3). - § 6513(c): Pub. L. 89–809, § 105(f)(2), inserted reference to chapter 3 in provisions preceding par. (1) and “or other amount” after “remuneration” in par. (2). ## § 7701: Definitions - § 7701(a)(31): Pub. L. 89–809 substituted “, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States,” for “from sources without the United States”.