of subsections (a), (b), (c), and (d) and sections 907 and 960 shall be applied separately with respect to each foreign country or possession with respect to which taxes described in section 901(b) are paid or accrued. . (c) Effective date The amendment made by this section shall apply to taxable years beginning on or after the applicable date. 312. Denial of credit and deduction for foreign taxes with respect to excluded subpart F income (a) In general Section 901 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following: (n) Denial of foreign tax credit and deduction with respect to excluded subpart F income (1) In general Notwithstanding section 960(b), no credit shall be allowed under subsection (a) for any income, war profits, or excess profits taxes paid or accrued (or deemed paid or accrued under section 960) with respect to the excludable portion of subpart F income or any distribution received by a United States shareholder (as defined in section 951(b)) which is properly attributable to such excludable portion. No deduction shall be allowed to a taxpayer under this chapter for any tax for which a credit is not allowable by reason of the preceding sentence. (2) Excludable portion The term excludable portion has the meaning given such term by section 959(g)(3)(B). (3) Coordination with section 78 Section 78 shall not apply to any tax which is not allowable as a credit under this section by reason of this subsection. . (b) 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. III Expense disallowance 321. Disallowance of deduction for expenses allocable to exempt income of a controlled foreign corporation (a) In general Part IX of subchapter B of chapter 1 is amended by adding at the end the following: 265A. Expenses allocable to exempt