US Code

Public Law 119-73 (01/23/2026)

26 U.S.C. § 853

Foreign tax credit allowed to shareholders

(a)

General rule

A regulated investment company—
(1)
more than 50 percent of the value (as defined in section 851(c)(4)) of whose total assets at the close of the taxable year consists of stock or securities in foreign corporations, and
(2)
which meets the requirements of section 852(a) for the taxable year,
may, for such taxable year, elect the application of this section with respect to income, war profits, and excess profits taxes described in section 901(b)(1), which are paid by the investment company during such taxable year to foreign countries and possessions of the United States.
(b)

Effect of election

If the election provided in subsection (a) is effective for a taxable year—
(1)
the regulated investment company—
(A)
shall not, with respect to such taxable year, be allowed a deduction under section 164(a) or a credit under section 901 for taxes to which subsection (a) is applicable, and
(B)
shall be allowed as an addition to the dividends paid deduction for such taxable year the amount of such taxes;
(2)
each shareholder of such investment company shall—
(A)
include in gross income and treat as paid by him his proportionate share of such taxes, and
(B)
treat as gross income from sources within the respective foreign countries and possessions of the United States, for purposes of applying subpart A of part III of subchapter N, the sum of his proportionate share of such taxes and the portion of any dividend paid by such investment company which represents income derived from sources within foreign countries or possessions of the United States.
(c)

Statements to shareholders

The amounts to be treated by the shareholder, for purposes of subsection (b)(2), as his proportionate share of—
(1)
taxes paid to any foreign country or possession of the United States, and
(2)
gross income derived from sources within any foreign country or possession of the United States,
shall not exceed the amounts so reported by the company in a written statement furnished to such shareholder.
(d)

Manner of making election

The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe by regulations.

(e)

Treatment of certain taxes not allowed as a credit under section 901

lThis section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of subsection (k) or () of such section.

(f)

Cross references

(1)
For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section 164(a) and section 901.
(2)
For definition of foreign corporation, see section 7701(a)(5).

Aug. 16, 1954, ch. 73668A Stat. 272Pub. L. 88–272, title II, § 229(a)(3)78 Stat. 99Pub. L. 94–455, title XIX, § 1906(b)(13)(A)90 Stat. 1834Pub. L. 99–514, title VI, § 655(a)(3)100 Stat. 2299Pub. L. 105–34, title X, § 1053(b)111 Stat. 943Pub. L. 105–206, title VI, § 6010(k)(1)112 Stat. 815Pub. L. 109–135, title IV, § 403(aa)(1)119 Stat. 2630Pub. L. 111–325, title III, § 301(c)124 Stat. 3544(, ; , , ; , , ; , , ; , , ; , (2), , ; , , ; , , .)

Editorial Notes

Amendments

Pub. L. 111–325, § 301(c)(1)(B)2010—Subsec. (c). , substituted “Statements” for “Notice” in heading.

Pub. L. 111–325, § 301(c)(1)(A), which directed amendment by substituting “so reported by the company in a written statement furnished to such shareholder” for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of the taxable year”, was executed by making the substitution for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year” in concluding provisions to reflect the probable intent of Congress.

Pub. L. 111–325, § 301(c)(2)Subsec. (d). , struck out “and notifying shareholders” after “election” in heading and “and the notice to shareholders required by subsection (c)” after “subsection (a)” in text.

Pub. L. 109–1352005—Subsec. (e). amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows: “This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”

Pub. L. 105–206, § 6010(k)(2)1998—Subsec. (c). , struck out at end “Such notice shall also include the amount of such taxes which (without regard to the election under this section) would not be allowable as a credit under section 901(a) to the regulated investment company by reason of section 901(k).”

Pub. L. 105–206, § 6010(k)(1)Subsecs. (e), (f). , added subsec. (e) and redesignated former subsec. (e) as (f).

Pub. L. 105–341997—Subsec. (c). inserted at end “Such notice shall also include the amount of such taxes which (without regard to the election under this section) would not be allowable as a credit under section 901(a) to the regulated investment company by reason of section 901(k).”

Pub. L. 99–5141986—Subsec. (c). substituted “60 days” for “45 days”.

Pub. L. 94–4551976—Subsec. (d). struck out “or his delegate” after “Secretary”.

Pub. L. 88–2721964—Subsec. (c). substituted “45 days” for “30 days”.

Statutory Notes and Related Subsidiaries

Effective Date of 2010 Amendment

Pub. L. 111–325section 301(h) of Pub. L. 111–325section 852 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2005 Amendment

Pub. L. 109–135Pub. L. 108–357section 403(nn) of Pub. L. 109–135section 26 of this titleAmendment by effective as if included in the provision of the American Jobs Creation Act of 2004, , to which such amendment relates, see , set out as a note under .

Effective Date of 1998 Amendment

Pub. L. 105–206Pub. L. 105–34section 6024 of Pub. L. 105–206section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, , to which such amendment relates, see , set out as a note under .

Effective Date of 1997 Amendment

Pub. L. 105–34, title X, § 1053(c)111 Stat. 943

section 901 of this title“The amendments made by this section [amending this section and ] shall apply to dividends paid or accrued more than 30 days after the date of the enactment of this Act [].”
, , , provided that:

Effective Date of 1986 Amendment

Pub. L. 99–514section 655(b) of Pub. L. 99–514section 852 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 1964 Amendment

Pub. L. 88–272section 229(c) of Pub. L. 88–272section 852 of this titleAmendment by applicable to taxable years of regulated investment companies ending on or after , see , set out as a note under .