26 U.S.C. § 951 : US Code - Section 951: Amounts included in gross income of United States shareholders

Search 26 U.S.C. § 951 : US Code - Section 951: Amounts included in gross income of United States shareholders

(a) Amounts included
(1) In general
If a foreign corporation is a controlled foreign corporation
for an uninterrupted period of 30 days or more during any taxable
year, every person who is a United States shareholder (as defined
in subsection (b)) of such corporation and who owns (within the
meaning of section 958(a)) stock in such corporation on the last
day, in such year, on which such corporation is a controlled
foreign corporation shall include in his gross income, for his
taxable year in which or with which such taxable year of the
corporation ends -
(A) the sum of -
(i) his pro rata share (determined under paragraph (2)) of
the corporation's subpart F income for such year,
(ii) his pro rata share (determined under section 955(a)(3)
as in effect before the enactment of the Tax Reduction Act of
1975) of the corporation's previously excluded subpart F
income withdrawn from investment in less developed countries
for such year, and
(iii) his pro rata share (determined under section
955(a)(3)) of the corporation's previously excluded subpart F
income withdrawn from foreign base company shipping
operations for such year; and
(B) the amount determined under section 956 with respect to
such shareholder for such year (but only to the extent not
excluded from gross income under section 959(a)(2)).
(2) Pro rata share of subpart F income
The pro rata share referred to in paragraph (1)(A)(i) in the
case of any United States shareholder is the amount -
(A) which would have been distributed with respect to the
stock which such shareholder owns (within the meaning of
section 958(a)) in such corporation if on the last day, in its
taxable year, on which the corporation is a controlled foreign
corporation it had distributed pro rata to its shareholders an
amount (i) which bears the same ratio to its subpart F income
for the taxable year, as (ii) the part of such year during
which the corporation is a controlled foreign corporation bears
to the entire year, reduced by
(B) the amount of distributions received by any other person
during such year as a dividend with respect to such stock, but
only to the extent of the dividend which would have been
received if the distribution by the corporation had been the
amount (i) which bears the same ratio to the subpart F income
of such corporation for the taxable year, as (ii) the part of
such year during which such shareholder did not own (within the
meaning of section 958(a)) such stock bears to the entire year.
For purposes of subparagraph (B), any gain included in the gross
income of any person as a dividend under section 1248 shall be
treated as a distribution received by such person with respect to
the stock involved.
(3) Limitation on pro rata share of previously excluded subpart F
income withdrawn from investment
For purposes of paragraph (1)(A)(iii), the pro rata share of
any United States shareholder of the previously excluded subpart
F income of a controlled foreign corporation withdrawn from
investment in foreign base company shipping operations shall not
exceed an amount -
(A) which bears the same ratio to his pro rata share of such
income withdrawn (as determined under section 955(a)(3)) for
the taxable year, as
(B) the part of such year during which the corporation is a
controlled foreign corporation bears to the entire year.
(b) United States shareholder defined
For purposes of this subpart, the term "United States
shareholder" means, with respect to any foreign corporation, a
United States person (as defined in section 957(c)) who owns
(within the meaning of section 958(a)), or is considered as owning
by applying the rules of ownership of section 958(b), 10 percent or
more of the total combined voting power of all classes of stock
entitled to vote of such foreign corporation.
(c) Foreign trade income not taken into account
(1) In general
The foreign trade income of a FSC and any deductions which are
apportioned or allocated to such income shall not be taken into
account under this subpart.
(2) Foreign trade income
For purposes of this subsection, the term "foreign trade
income" has the meaning given such term by section 923(b),(!1)
but does not include section 923(a)(2) (!1) non-exempt income
(within the meaning of section 927(d)(6)).(!1)
(d) Coordination with passive foreign investment company provisions
If, but for this subsection, an amount would be included in the
gross income of a United States shareholder for any taxable year
both under subsection (a)(1)(A)(i) and under section 1293 (relating
to current taxation of income from certain passive foreign
investment companies), such amount shall be included in the gross
income of such shareholder only under subsection (a)(1)(A).