gain from the sale or exchange of capital assets
(3) Definitions For purposes of this subsection— (A) Foreign source capital gain net income The term “foreign source capital gain net income” means the lesser of— (i) capital gain net income from sources without the United States, or (ii) capital gain net income. (B) Foreign source net capital gain The term “foreign source net capital gain” means the lesser of— (i) net capital gain from sources without the United States, or (ii) net capital gain. (C) Section 1231 gains The term “gain from the sale or exchange of capital assets” includes any gain so treated under section 1231. (D) Capital gain rate differential There is a capital gain rate differential for any year if subsection (h) of section 1 applies to such taxable year. (E) Rate differential portion The rate differential portion of foreign source net capital gain, net capital gain, or the excess of net capital gain from sources within the United States over net capital gain, as the case may be, is the same proportion of such amount as— (i) the excess of— (I) the highest rate of tax set forth in subsection (a), (b), (c), (d), or (e) of section 1 (whichever applies), over (II) the alternative rate of tax determined under section 1(h), bears to (ii) that rate referred to in subclause (I).