Par. 5. Section 1.312-8 is amended by adding paragraph (c) to read as follows:
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(c) Previously taxed earnings and profits that are distributed to a domestic corporation in a covered distribution (determined under § 1.959-4) do not increase the corporation's earnings and profits. See §§ 1.959-4 and 1.961-4 for rules excluding distributed previously taxed earnings and profits from gross income and reducing basis. See also § 1.312-6(f) (sections 951(a) and 951A(a) inclusions increase earnings and profits). This paragraph (c) applies to a taxable year of a domestic corporation beginning on or after [date of publication of final regulations in the Federal Register ]. This paragraph (c) also applies to a taxable year of a domestic corporation that is a shareholder in a foreign corporation, if a taxable year of the foreign corporation that is an early application year (as described in § 1.959-12(d)) ends with or within the taxable year of the domestic corporation.