26 U.S.C. § 895 — Income derived by a foreign central bank

Page 2095 TITLE 26—INTERNAL REVENUE CODE § 896 Editorial Notes AMENDMENTS 1997—Subsec. (c). Pub. L. 105–34 added subsec. (c). 1988—Subsec. (a). Pub. L. 100–647 substituted ‘‘Treaty provisions’’ for ‘‘Income affected by treaty’’ in heading and amended text generally. Prior to amendment, text read as follows: ‘‘Income of any kind, to the extent re- quired by any treaty obligation of the United States, shall not be included in gross income and shall be ex- empt from taxation under this subtitle.’’ 1966—Pub. L. 89–809 designated existing provisions as subsec. (a), added subsec. (b), and substituted ‘‘affected by treaty’’ for ‘‘exempt under treaty’’ in section catch- line. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1997 AMENDMENT Pub. L. 105–34, title X, § 1054(b), Aug. 5, 1997, 111 Stat. 944, provided that: ‘‘The amendments made by this sec- tion [amending this section] shall apply upon the date of enactment of this Act [Aug. 5, 1997].’’ EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Pub. L. 89–809, title I, § 105(d), Nov. 13, 1966, 80 Stat. 1565, provided that: ‘‘The amendments made by this section (other than subsections (d) and (f)) [amending this section and enacting section 896 of this title] shall apply with respect to taxable years beginning after De- cember 31, 1966.’’ § 895. Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits Income derived by a foreign central bank of issue from obligations of the United States or of any agency or instrumentality thereof (includ- ing beneficial interests, participations, and other instruments issued under section 302(c) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717)) which are owned by such foreign central bank of issue, or derived from interest on deposits with persons carrying on the banking business, shall not be included in gross income and shall be exempt from taxation under this subtitle unless such obligations or de- posits are held for, or used in connection with, the conduct of commercial banking functions or other commercial activities. For purposes of the preceding sentence the Bank for International Settlements shall be treated as a foreign central bank of issue. (Added Pub. L. 87–29, § 1(a), May 4, 1961, 75 Stat. 64; amended Pub. L. 89–809, title I, § 102(a)(4)(A), Nov. 13, 1966, 80 Stat. 1543.) Editorial Notes AMENDMENTS 1966—Pub. L. 89–809 exempted income derived from obligations of agencies or instrumentalities of the United States and income derived from interest on de- posits with persons carrying on the banking business, inserted ‘‘(including beneficial interests, participa- tions, 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. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89–809 applicable with respect to taxable years beginning after Dec. 31, 1966, except that in applying section 864(c)(4)(B)(iii) of this title with respect to a binding contract entered into on or before Feb. 24, 1966, activities in the United States on or before such date in negotiating or carrying out such contract shall not be taken into account, see section 102(e)(1) of Pub. L. 89–809, set out as a note under sec- tion 861 of this title. EFFECTIVE DATE Pub. L. 87–29, § 1(c), May 4, 1961, 75 Stat. 64, provided that: ‘‘The amendments made by subsections (a) and (b) [enacting this section and amending analysis preceding section 891 of this title] shall be effective with respect to income received in taxable years beginning after De- cember 31, 1960.’’ § 896. Adjustment of tax on nationals, residents, and corporations of certain foreign countries (a) Imposition of more burdensome taxes by for- eign country Whenever the President finds that— (1) under the laws of any foreign country, considering the tax system of such foreign country, citizens of the United States not resi- dents of such foreign country or domestic cor- porations are being subjected to more burden- some taxes, on any item of income received by such citizens or corporations from sources within such foreign country, than taxes im- posed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corporations of such foreign country, (2) such foreign country, when requested by the United States to do so, has not acted to re- vise or reduce such taxes so that they are no more burdensome than taxes imposed by the provisions of this subtitle on similar income derived from sources within the United States by residents or corporations of such foreign country, and (3) it is in the public interest to apply pre- 1967 tax provisions in accordance with the pro- visions of this subsection to residents or cor- porations of such foreign country, the President shall proclaim that the tax on such similar income derived from sources within the United States by residents or corporations of such foreign country shall, for taxable years beginning after such proclamation, be deter- mined under this subtitle without regard to amendments made to this subchapter and chap- ter 3 on or after the date of enactment of this section. (b) Imposition of discriminatory taxes by foreign country Whenever the President finds that— (1) under the laws of any foreign country, citizens of the United States or domestic cor- porations (or any class of such citizens or cor- porations) are, with respect to any item of in- come, being subjected to a higher effective