B of chapter 1 is amended by inserting after the item relating to section 265 the following: Sec. 265A. Expense allocable to exempt income of a controlled foreign corporation. . (c) Effective date The amendments made by this section shall apply to taxable years of foreign corporations beginning on or after the applicable date, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end. IV Other provisions relating to subpart F A Previously deferred foreign income 331. Treatment of previously deferred foreign income (a) In general Subpart F of part III of subchapter N of chapter 1 is amended by adding at the end the following new section: 966. Inclusion of previously deferred foreign income (a) Inclusion as subpart F income (1) In general Subject to the provisions of paragraph (2), the subpart F income (determined under section 952 without regard to this section) of a controlled foreign corporation for its last taxable year beginning before the applicable date (as defined in section 300 of the Infrastructure 2.0 Act ), shall be increased by the accumulated deferred foreign income of the corporation. (2) Inclusion only to apply to domestic corporations In the case of any increase in subpart F income of a controlled foreign corporation by reason of paragraph (1)— (A) notwithstanding section 951(a)(1), the inclusion in gross income under such section of a United States shareholder's pro rata portion (as determined under section 951(a)(2)) of such increased subpart F income shall only apply if the United States shareholder is a domestic corporation, and (B) there shall be allowed as a deduction for the taxable year of such United States shareholder in which such increased subpart F income is included in such shareholder's gross income under section 951(a)(1) an amount equal to the applicable percentage of the amount of the income so included. (b) Accumulated deferred foreign income For purposes of this section— (1) In general The term accumulated deferred