General rule
Gain from the sale or exchange of a patent, an invention, model, or design (whether or not patented), a copyright, a secret formula or process, or any other similar property right to any foreign corporation by any United States person (as defined in section 7701(a)(30)) which controls such foreign corporation shall, if such gain would (but for the provisions of this subsection) be gain from the sale or exchange of a capital asset or of property described in section 1231, be considered as ordinary income.
Control
For purposes of subsection (a), control means, with respect to any foreign corporation, the ownership, directly or indirectly, of stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote. For purposes of this subsection, the rules for determining ownership of stock prescribed by section 958 shall apply.
Pub. L. 87–834, § 16(a)76 Stat. 1045Pub. L. 89–809, title I, § 104(m)(3)80 Stat. 1563Pub. L. 94–455, title XIX, § 1901(b)(3)(K)90 Stat. 1793Pub. L. 113–295, div. A, title II, § 221(a)(84)128 Stat. 4049(Added , , ; amended , , ; , , ; , , .)
Editorial Notes
Amendments
Pub. L. 113–2952014—Subsec. (a). struck out “after ,” before “of a patent”.
Pub. L. 94–4551976—Subsec. (a). substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”.
Pub. L. 89–8091966—Subsec. (a). substituted “Gain” for “Except as provided in subsection (c), gain”.
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Pub. L. 113–295section 221(b) of Pub. L. 113–295section 1 of this titleAmendment by effective , subject to a savings provision, see , set out as a note under .
Effective Date of 1976 Amendment
Pub. L. 94–455section 1901(d) of Pub. L. 94–455section 2 of this titleAmendment by effective for taxable years beginning after , see , set out as a note under .
Effective Date of 1966 Amendment
Pub. L. 89–809section 104(n) of Pub. L. 89–809section 11 of this titleAmendment by applicable with respect to taxable years beginning after , see , set out as a note under .
Effective Date
Pub. L. 87–834, § 16(c)76 Stat. 1045