26 U.S.C. § 957 : US Code - Section 957: Controlled foreign corporations; United States persons

Search 26 U.S.C. § 957 : US Code - Section 957: Controlled foreign corporations; United States persons

(a) General rule
For purposes of this subpart, the term "controlled foreign
corporation" means any foreign corporation if more than 50 percent
of -
(1) the total combined voting power of all classes of stock of
such corporation entitled to vote, or
(2) the total value of the stock of such corporation,
is owned (within the meaning of section 958(a)), or is considered
as owned by applying the rules of ownership of section 958(b), by
United States shareholders on any day during the taxable year of
such foreign corporation.
(b) Special rule for insurance
For purposes only of taking into account income described in
section 953(a) (relating to insurance income), the term "controlled
foreign corporation" includes not only a foreign corporation as
defined by subsection (a) but also one of which more than 25
percent of the total combined voting power of all classes of stock
(or more than 25 percent of the total value of stock) is owned
(within the meaning of section 958(a)), or is considered as owned
by applying the rules of ownership of section 958(b), by United
States shareholders on any day during the taxable year of such
corporation, if the gross amount of premiums or other consideration
in respect of the reinsurance or the issuing of insurance or
annuity contracts described in section 953(a)(1) (!1) exceeds 75
percent of the gross amount of all premiums or other consideration
in respect of all risks.
(c) United States person
For purposes of this subpart, the term "United States person" has
the meaning assigned to it by section 7701(a)(30) except that -
(1) with respect to a corporation organized under the laws of
the Commonwealth of Puerto Rico, such term does not include an
individual who is a bona fide resident of Puerto Rico, if a
dividend received by such individual during the taxable year from
such corporation would, for purposes of section 933(1), be
treated as income derived from sources within Puerto Rico, and
(2) with respect to a corporation organized under the laws of
Guam, American Samoa, or the Northern Mariana Islands -
(A) 80 percent or more of the gross income of which for the 3-
year period ending at the close of the taxable year (or for
such part of such period as such corporation or any predecessor
has been in existence) was derived from sources within such a
possession or was effectively connected with the conduct of a
trade or business in such a possession, and
(B) 50 percent or more of the gross income of which for such
period (or part) was derived from the active conduct of a trade
or business within such a possession,
such term does not include an individual who is a bona fide
resident of Guam, American Samoa, or the Northern Mariana
Islands.
For purposes of subparagraphs (A) and (B) of paragraph (2), the
determination as to whether income was derived from the active
conduct of a trade or business within a possession shall be made
under regulations prescribed by the Secretary.