26 U.S.C. § 959 : US Code - Section 959: Exclusion from gross income of previously taxed earnings and profits

Search 26 U.S.C. § 959 : US Code - Section 959: Exclusion from gross income of previously taxed earnings and profits

(a) Exclusion from gross income of United States persons
For purposes of this chapter, the earnings and profits of a
foreign corporation attributable to amounts which are, or have
been, included in the gross income of a United States shareholder
under section 951(a) shall not, when -
(1) such amounts are distributed to, or
(2) such amounts would, but for this subsection, be included
under section 951(a)(1)(B) in the gross income of,
such shareholder (or any other United States person who acquires
from any person any portion of the interest of such United States
shareholder in such foreign corporation, but only to the extent of
such portion, and subject to such proof of the identity of such
interest as the Secretary may by regulations prescribe) directly or
indirectly through a chain of ownership described under section
958(a), be again included in the gross income of such United States
shareholder (or of such other United States person). The rules of
subsection (c) shall apply for purposes of paragraph (1) of this
subsection and the rules of subsection (f) shall apply for purposes
of paragraph (2) of this subsection.
(b) Exclusion from gross income of certain foreign subsidiaries
For purposes of section 951(a), the earnings and profits of a
controlled foreign corporation attributable to amounts which are,
or have been, included in the gross income of a United States
shareholder under section 951(a), shall not, when distributed
through a chain of ownership described under section 958(a), be
also included in the gross income of another controlled foreign
corporation in such chain for purposes of the application of
section 951(a) to such other controlled foreign corporation with
respect to such United States shareholder (or to any other United
States shareholder who acquires from any person any portion of the
interest of such United States shareholder in the controlled
foreign corporation, but only to the extent of such portion, and
subject to such proof of identity of such interest as the Secretary
may prescribe by regulations).
(c) Allocation of distributions
For purposes of subsections (a) and (b), section 316(a) shall be
applied by applying paragraph (2) thereof, and then paragraph (1)
thereof -
(1) first to the aggregate of -
(A) earnings and profits attributable to amounts included in
gross income under section 951(a)(1)(B) (or which would have
been included except for subsection (a)(2) of this section),
and
(B) earnings and profits attributable to amounts included in
gross income under section 951(a)(1)(C) (or which would have
been included except for subsection (a)(3) of this section),
with any distribution being allocated between earnings and
profits described in subparagraph (A) and earnings and profits
described in subparagraph (B) proportionately on the basis of the
respective amounts of such earnings and profits,
(2) then to earnings and profits attributable to amounts
included in gross income under section 951(a)(1)(A) (but reduced
by amounts not included under subparagraph (B) or (C) of section
951(a)(1) because of the exclusions in paragraphs (2) and (3) of
subsection (a) of this section), and
(3) then to other earnings and profits.
References in this subsection to section 951(a)(1)(C) and
subsection (a)(3) shall be treated as references to such provisions
as in effect on the day before the date of the enactment of the
Small Business Job Protection Act of 1996.
(d) Distributions excluded from gross income not to be treated as
dividends
Except as provided in section 960(a)(3), any distribution
excluded from gross income under subsection (a) shall be treated,
for purposes of this chapter, as a distribution which is not a
dividend; except that such distributions shall immediately reduce
earnings and profits.
(e) Coordination with amounts previously taxed under section 1248
For purposes of this section and section 960(b), any amount
included in the gross income of any person as a dividend by reason
of subsection (a) or (f) of section 1248 shall be treated as an
amount included in the gross income of such person (or, in any case
to which section 1248(e) applies, of the domestic corporation
referred to in section 1248(e)(2)) under section 951(a)(1)(A).
(f) Allocation rules for certain inclusions
(1) In general
For purposes of this section, amounts that would be included
under subparagraph (B) of section 951(a)(1) (determined without
regard to this section) shall be treated as attributable first to
earnings described in subsection (c)(2), and then to earnings
described in subsection (c)(3).
(2) Treatment of distributions
In applying this section, actual distributions shall be taken
into account before amounts that would be included under section
951(a)(1)(B) (determined without regard to this section).