1 2 3 4 5 67 8 9 10 11 12 43 (i) Paragraph (1) of section 1201(b) (as such paragraph was in effect for taxable years beginning before January 1, 1979) is amended by striking out "50 percent of the net capital gain" and inserting in lieu thereof "the excess of the net capital gain over the deduction under section 1202". (ii) Subsection (c) of section 1201 (as such subsection was in effect for taxable years beginning before January 1, 1979) is amended to read as follows: "(c) COMPUTATION OF TAX WHERE CAPITAL GAIN 13 EXCEEDS $50,000.—The tax computed for purposes of sub14 section (b)(3) shall be the amount by which a tax determined 15 under section 1 or 511 on an amount equal to the taxable 16 income (but not less than the excess of the net capital gain 17 over the deduction under section 1202) for the taxable year 18 exceeds tax determined under section 1 or 511 on an 19 amount equal to the sum of 20 21 22 23 "(1) the amount subject to tax under subsection (b)(1), plus "(2) an amount determined by multiplying the sum referred to in subsection (b)(2)(A) by a fraction m 44 "(A) the numerator of which is the excess of the net capital gain over the deduction under section 1202, and "(B) the denominator of which is the net 1 2 3 4 5 8 9 10 45 (3) AMENDMENTS RELATED TO SECTION 403 OF THE ACT. (A) CLARIFICATION OF TRANSITIONAL RULE.-Subsection (c) of section 1201 (relating to transitional rule for taxable years which include January 1, 1979) is amended— (i) by striking out so much of such section as precedes "a corporation" and insert ing in lieu thereof the following: "(c) TRANSITIONAL RULE.-If for any taxable year 11 ending after December 31, 1978, and beginning before Janu12 ary 1, 1980,", and (ii) by amending clause (ii) of paragraph (2)(A) to read as follows: "(ii) the net capital gain taking into account only gain or loss properly taken into account for the portion of the taxable year after December 31, 1978, plus". (B) UNDISTRIBUTED CAPITAL GAIN OF REGULATED INVESTMENT COMPANY.-Clause (iii) of section 852(b)(3)(D) (relating to treatment by shareholders of undistributed capital gain) is amended by striking out "70 percent" and inserting in lieu thereof "72 percent". 46 (C) ADDITION TO RESERVES FOR BAD DEBTS.-Clause (iv) of section 593(b)(2)(E) is amended by striking out "%" each place it appears and inserting in lieu thereof "1846". (D) CLERICAL AMENDMENTS. (i) Paragraph (3) of section 904(b) is amended by redesignating the subparagraph (E) added by section 403(c)(4) of the Reve nue Act of 1978 as subparagraph (F). (ii) Subparagraph (B) of section 403(c)(4) of the Revenue Act of 1978 is amended by striking out “striking the period at the end of subparagraph (D) of paragraph (3), inserting in lieu thereof a comma, and inserting immediately thereafter" and inserting in lieu thereof "adding at the end of paragraph (3)". (4) AMENDMENTS RELATED TO SECTION 421 OF THE ACT. (A) CERTAIN DEDUCTIONS WHICH MAY BE CARRIED OVER NOT TAKEN INTO ACCOUNT. Paragraph (1) of section 55(b) (defining alternative minimum taxable income) is amended by adding at the end thereof the following new sentence: 47 1 "For purposes of subparagraph (A), a deduction shall 2 3 not be taken into account to the extent such deduction may be carried to another taxable year." 4 (B) TREATMENT OF FOREIGN TAX CREDIT.-Paragraphs (1) and (2) of section 55(c) (relating to credits) are amended to read as follows: "(1) CREDITS OTHER THAN FOREIGN TAX CREDIT NOT ALLOWABLE, ETC.-For purposes of determining the amount of any credit allowable under subpart A of part IV of this subchapter (other than the foreign tax credit allowed under section 33(a))— "(A) the tax imposed by this section shall not be treated as a tax imposed by this chapter, and "(B) the amount of the foreign tax credit allowed under section 33(a) shall be determined without regard to this section. "(2) FOREIGN TAX CREDIT ALLOWED AGAINST by subsection (a) shall be determined under sub |