to the satisfaction of the Secretary that such income was subject to an effective rate of income tax imposed by a foreign country in excess of 5 percent. (B) Applicable percentage For purposes of subparagraph (A), the term applicable percentage means the ratio (expressed as a percentage), not greater than 100 percent, of— (i) the number of percentage points by which the effective rate of income tax referred to in subparagraph (A) exceeds 5 percentage points, over (ii) 10 percentage points. (C) Treatment of losses in determining effective rate of foreign income tax For purposes of determining the effective rate of income tax imposed by any foreign country— (i) such effective rate shall be determined without regard to any losses carried to the relevant taxable year, and (ii) to the extent the income with respect to such intangible reduces losses in the relevant taxable year, such effective rate shall be treated as being the effective rate which would have been imposed on such income without regard to such losses. (3) Covered intangible The term covered intangible means, with respect to any controlled foreign corporation, any intangible property (as defined in section 936(h)(3)(B))— (A) which is sold, leased, licensed, or otherwise transferred (directly or indirectly) to such controlled foreign corporation from a related person, or (B) with respect to which such controlled foreign corporation and one or more related persons has (directly or indirectly) entered into any shared risk or development agreement (including any cost sharing agreement). (4) Related person The term related person has the meaning given such term in subsection (d)(3). . (c) Separate basket for foreign tax credit Subsection (d) of section 904 is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph: (7) Separate application to foreign base company excess intangible income (A) In general Subsections (a), (b), and (c) of this section and sections 902, 907, and 960 shall be applied