of this subpart, any item of income of the controlled foreign corporation which is effectively connected with the conduct by such corporation of a trade or business within the United States shall not be taken into account in computing the subpart F income of such corporation unless such item is exempt from taxation (or is subject to a reduced rate of tax) pursuant to a treaty obligation of the United States. For purposes of this subsection, any exemption (or reductions) with respect to the tax imposed by section 884 shall not be taken into account. (f) Deductions For purposes of subsections (b)(1)(B) and (c)(1)(B), the active foreign market income, and gross income other than active foreign market income, of a controlled foreign corporation shall each be reduced, under regulations prescribed by the Secretary, by any deductions (including taxes) of such corporation properly allocable to items of income taken into account in computing such income. 953. Active foreign market income (a) Active foreign market income defined For purposes of this subpart, the term active foreign market income means, with respect to any controlled foreign corporation, the aggregate of all items of income which are— (1) attributable to economically significant activities with respect to a qualified trade or business, and (2) derived in connection with— (A) property which is sold, exchanged, or otherwise disposed of for use, consumption, or disposition outside of the United States, or (B) services which are provided outside of the United States with respect to persons or property located outside of the United States. (b) Treatment of passive income (1) In general Except as otherwise provided in this subsection, the term active foreign market income shall not include the passive income (as defined in section 954) of a controlled foreign corporation. (2) Active foreign market income includes certain income The term active foreign market income shall include— (A) if the controlled foreign corporation or a qualified business unit of the