26 U.S.C. § 961 : US Code - Section 961: Adjustments to basis of stock in controlled foreign corporations and of other property

Search 26 U.S.C. § 961 : US Code - Section 961: Adjustments to basis of stock in controlled foreign corporations and of other property

(a) Increase in basis
Under regulations prescribed by the Secretary, the basis of a
United States shareholder's stock in a controlled foreign
corporation, and the basis of property of a United States
shareholder by reason of which he is considered under section
958(a)(2) as owning stock of a controlled foreign corporation,
shall be increased by the amount required to be included in his
gross income under section 951(a) with respect to such stock or
with respect to such property, as the case may be, but only to the
extent to which such amount was included in the gross income of
such United States shareholder. In the case of a United States
shareholder who has made an election under section 962 for the
taxable year, the increase in basis provided by this subsection
shall not exceed an amount equal to the amount of tax paid under
this chapter with respect to the amounts required to be included in
his gross income under section 951(a).
(b) Reduction in basis
(1) In general
Under regulations prescribed by the Secretary, the adjusted
basis of stock or other property with respect to which a United
States shareholder or a United States person receives an amount
which is excluded from gross income under section 959(a) shall be
reduced by the amount so excluded. In the case of a United States
shareholder who has made an election under section 962 for any
prior taxable year, the reduction in basis provided by this
paragraph shall not exceed an amount equal to the amount received
which is excluded from gross income under section 959(a) after
the application of section 962(d).
(2) Amount in excess of basis
To the extent that an amount excluded from gross income under
section 959(a) exceeds the adjusted basis of the stock or other
property with respect to which it is received, the amount shall
be treated as gain from the sale or exchange of property.
(c) Basis adjustments in stock held by foreign corporations
Under regulations prescribed by the Secretary, if a United States
shareholder is treated under section 958(a)(2) as owning stock in a
controlled foreign corporation which is owned by another controlled
foreign corporation, then adjustments similar to the adjustments
provided by subsections (a) and (b) shall be made to -
(1) the basis of such stock, and
(2) the basis of stock in any other controlled foreign
corporation by reason of which the United States shareholder is
considered under section 958(a)(2) as owning the stock described
in paragraph (1),
but only for the purposes of determining the amount included under
section 951 in the gross income of such United States shareholder
(or any other United States shareholder who acquires from any
person any portion of the interest of such United States
shareholder by reason of which such shareholder was treated as
owning such stock, 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). The preceding sentence shall not
apply with respect to any stock to which a basis adjustment applies
under subsection (a) or (b).