business, or (III) of a kind which would be insurance income as defined in section 955(a). (E) High-taxed income The term high-taxed income means any income which (but for this subparagraph) would be passive category income if the sum of— (i) the foreign income taxes paid or accrued by the taxpayer with respect to such income, and (ii) the foreign income taxes deemed paid by the taxpayer with respect to such income under section 960, exceeds the highest rate of tax specified in section 1 or 11 (whichever applies) multiplied by the amount of such income (determined with regard to section 78). For purposes of the preceding sentence, the term foreign income taxes means any income, war profits, or excess profits tax imposed by any foreign country or possession of the United States. (F) Treatment of income tax base differences (i) In general In the case of taxable years beginning after December 31, 2006, tax imposed under the law of a foreign country or possession of the United States on an amount which does not constitute income under United States tax principles shall be treated as imposed on income described in paragraph (1)(C). (ii) Special rules for years after 2006 and before the applicable date In the case of taxable years beginning after December 31, 2006, and on or before the applicable date (as defined in section 300 of the Infrastructure 2.0 Act ), tax imposed under the law of a foreign country or possession of the United States on an amount which does not constitute income under United States tax principles shall be treated as imposed on income described in paragraph (1)(B) (as in effect for taxable years beginning the day before such applicable date). (iii) Special rule for years before 2007 (I) In general In the case of taxes paid or accrued in taxable years beginning after December 31, 2004, and before January 1, 2007, a taxpayer may elect to treat tax imposed under the law of a foreign country or possession of the United States on an amount which does not constitute income under United States tax