but only to the extent that the net amount so determined does not exceed the limitation determined under subparagraph (2) of this paragraph. See § 1.955-2 for determining the amount of qualified investments in less developed countries.
The rules of this subdivision apply only in determining the limitation on a controlled foreign corporation's decrease in qualified investments in less developed countries. See section 959 and the regulations thereunder for limitations on the exclusion from gross income of previously taxed earnings and profits.
(1) Qualified investments in less developed countries at the close of 1974 | $10,000 |
(2) Less: qualified investments in less developed countries at the close of 1975 | 10,000 |
(3) Balance | 0 |
(Further computations similar to those set out in lines (iv) through (ix) of example 1 of paragraph (d) of this section are unnecessary because the balance in line (3) of this example is zero.)
(1) Qualified investments in less developed countries at the close of 1975 | $0 |
(2) Less: qualified investments in less developed countries at the close of 1976 | 0 |
(3) Balance | 0 |
(1) Qualified investments in less developed countries at the close of 1975 | $10,000 |
(2) Less: qualified investments in less developed countries at the close of 1976 | 10,000 |
(3) Balance | 0 |
(i) Qualified investments in less developed countries at the close of 1964 | $125,000 |
(ii) Less: Qualified investments in less developed countries at the close of 1965 | 75,000 |
(iii) Balance | 50,000 |
(iv) Less: Excess of recognized losses over recognized gains on sales during 1965 of qualified investments in less developed countries ($15,000 less $5,000) | 10,000 |
(v) Tentative decrease in qualified investments in less developed countries for 1965 | 40,000 |
(vi) Earnings and profits for 1963, 1964, and 1965 | 45,000 |
(vii) Excess of amount excluded under section 954(b)(1) from foreign base company income for 1963 ($75,000 over amount of previously excluded subpart F income withdrawn for 1964 from investment in less developed countries ($25,000) | 50,000 |
(viii) M Corporation's amount of previously excluded subpart F income withdrawn for 1965 from investment in less developed countries (item (v), but not to exceed the lesser of item (vi) or item (vii)) | 40,000 |
(ix) A's pro rata share of M Corporation's amount of previously excluded subpart F income withdrawn for 1965 from investment in less developed countries (60 percent of $40,000) | $24,000 |
26 C.F.R. §1.955-1