(1) On the making of an election by a filing constituent entity, a constituent entity-owner of an investment entity shall apply a taxable distribution method with respect to its ownership interest in the investment entity where the constituent entity-owner -
(a) is not an investment entity, and
(b) can be reasonably expected to be subject to tax on distributions from that investment entity at a tax rate that equals or exceeds the minimum tax rate.
(2) Under the taxable distribution method -
(a) distributions and deemed distributions of the qualifying income of an investment entity shall be included in the qualifying income of the constituent entity-owner that received the distribution, provided that it is not an investment entity,
(b) the amount of covered taxes incurred by the investment entity that is creditable against the tax liability of the constituent entity-owner arising from the distribution of the investment entity shall be included in the qualifying income and adjusted cover
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