US Code

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

26 U.S.C. § 882

Tax on income of foreign corporations connected with United States business

(a)

Imposition of tax

(1)

In general

1

1 So in original. The comma probably should not appear.
A foreign corporation engaged in trade or business within the United States during the taxable year shall be taxable as provided in section 11, 55, or 59A, on its taxable income which is effectively connected with the conduct of a trade or business within the United States.

(2)

Determination of taxable income

In determining taxable income for purposes of paragraph (1), gross income includes only gross income which is effectively connected with the conduct of a trade or business within the United States.

(3)

2
2 Par. (3) heading editorially supplied.
[Cross reference ]

For special tax treatment of gain or loss from the disposition by a foreign corporation of a United States real property interest, see section 897.

(b)

Gross income

In the case of a foreign corporation, except where the context clearly indicates otherwise, gross income includes only—
(1)
gross income which is derived from sources within the United States and which is not effectively connected with the conduct of a trade or business within the United States, and
(2)
gross income which is effectively connected with the conduct of a trade or business within the United States.
(c)

Allowance of deductions and credits

(1)

Allocation of deductions

(A)

General rule

In the case of a foreign corporation, the deductions shall be allowed only for purposes of subsection (a) and (except as provided by subparagraph (B)) only if and to the extent that they are connected with income which is effectively connected with the conduct of a trade or business within the United States; and the proper apportionment and allocation of the deductions for this purpose shall be determined as provided in regulations prescribed by the Secretary.

(B)

Charitable contributions

The deduction for charitable contributions and gifts provided by section 170 shall be allowed whether or not connected with income which is effectively connected with the conduct of a trade or business within the United States.

(2)

Deductions and credits allowed only if return filed

A foreign corporation shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F, including therein all the information which the Secretary may deem necessary for the calculation of such deductions and credits. The preceding sentence shall not apply for purposes of the tax imposed by section 541 (relating to personal holding company tax), and shall not be construed to deny the credit provided by section 33 for tax withheld at source or the credit provided by section 34 for certain uses of gasoline.

(3)

Foreign tax credit

Except as provided by section 906, foreign corporations shall not be allowed the credit against the tax for taxes of foreign countries and possessions of the United States allowed by section 901.

(4)

Cross reference

For rule that certain foreign taxes are not to be taken into account in determining deduction or credit, see section 906(b)(1).

(d)

Election to treat real property income as income connected with United States business

(1)

In general

A foreign corporation which during the taxable year derives any income—
(A)
from real property located in the United States, or from any interest in such real property, including (i) gains from the sale or exchange of real property or an interest therein, (ii) rents or royalties from mines, wells, or other natural deposits, and (iii) gains described in section 631(b) or (c), and
(B)
which, but for this subsection, would not be treated as income effectively connected with the conduct of a trade or business within the United States,
may elect for such taxable year to treat all such income as income which is effectively connected with the conduct of a trade or business within the United States. In such case, such income shall be taxable as provided in subsection (a)(1) whether or not such corporation is engaged in trade or business within the United States during the taxable year. An election under this paragraph for any taxable year shall remain in effect for all subsequent taxable years, except that it may be revoked with the consent of the Secretary with respect to any taxable year.
(2)

Election after revocation, etc.

Paragraphs (2) and (3) of section 871(d) shall apply in respect of elections under this subsection in the same manner and to the same extent as they apply in respect of elections under section 871(d).

(e)

Interest on United States obligations received by banks organized in possessions

In the case of a corporation created or organized in, or under the law of, a possession of the United States which is carrying on the banking business in a possession of the United States, interest on obligations of the United States which is not portfolio interest (as defined in section 881(c)(2)) shall—
(1)
for purposes of this subpart, be treated as income which is effectively connected with the conduct of a trade or business within the United States, and
(2)
shall be taxable as provided in subsection (a)(1) whether or not such corporation is engaged in trade or business within the United States during the taxable year.
(f)

Returns of tax by agent

If any foreign corporation has no office or place of business in the United States but has an agent in the United States, the return required under section 6012 shall be made by the agent.

Aug. 16, 1954, ch. 73668A Stat. 282Pub. L. 89–809, title I, § 104(b)(1)80 Stat. 1555Pub. L. 94–455, title XIX, § 1906(b)(13)(A)90 Stat. 1834Pub. L. 95–600, title III, § 301(b)(13)92 Stat. 2822Pub. L. 96–499, title XI, § 1122(c)(2)94 Stat. 2687Pub. L. 97–424, title V, § 515(b)(6)(F)96 Stat. 2182Pub. L. 98–369, div. A, title IV, § 474(r)(19)98 Stat. 843Pub. L. 99–514, title VII, § 701(e)(4)(F)100 Stat. 2343Pub. L. 100–647, title I, § 1012(s)(2)(B)102 Stat. 3527Pub. L. 113–295, div. A, title II, § 221(a)(12)(F)128 Stat. 4038Pub. L. 115–97, title I131 Stat. 2094Pub. L. 117–169, title I, § 10101(a)(4)(E)136 Stat. 1822(, ; , , ; , , ; , , ; , , ; , , ; , , ; , title XII, § 1236(a), , , 2576; , title II, § 2001(c)(2), title VI, § 6133(a), , , 3594, 3721; , , ; , §§ 12001(b)(14), 13001(b)(2)(L), 14401(d)(2), , , 2097, 2233; , , .)

Editorial Notes

Amendments

Pub. L. 117–1692022—Subsec. (a)(1). inserted “, 55,” after “section 11”.

Pub. L. 115–97, § 14401(d)(2)Pub. L. 115–97, § 12001(b)(14)2017—Subsec. (a)(1). , which directed insertion of “or 59A,” after “section 11,”, was executed by making the insertion after “section 11” to reflect the probable intent of Congress and the amendment by . See below.

Pub. L. 115–97, § 13001(b)(2)(L), struck out “or 1201(a)” before “on its taxable income”.

Pub. L. 115–97, § 12001(b)(14), struck out “, 55,” after “section 11”.

Pub. L. 113–2952014—Subsec. (a)(1). struck out “, 59A” after “section 11, 55”.

Pub. L. 100–647, § 2001(c)(2)1988—Subsec. (a)(1). , inserted reference to section 59A.

Pub. L. 100–647, § 1012(s)(2)(B)Subsec. (b). , inserted “, except where the context clearly indicates otherwise” after “foreign corporation”.

Pub. L. 100–647, § 6133(a)Subsec. (e). , substituted “interest on obligations of the United States which is not portfolio interest (as defined in section 881(c)(2))” for “interest on obligations of the United States”, and struck out at end “The preceding sentence shall not apply to any Guam corporation which is treated as not being a foreign corporation by section 881(b)(1) for the taxable year.”

Pub. L. 99–514, § 701(e)(4)(F)1986—Subsec. (a)(1). , inserted reference to section 55.

Pub. L. 99–514, § 1236(a)Subsec. (e). , inserted “The preceding sentence shall not apply to any Guam corporation which is treated as not being a foreign corporation by section 881(b)(1) for the taxable year.”

Pub. L. 98–3691984—Subsec. (c)(2). substituted reference to section “33” for “32” and “34” for “39”.

Pub. L. 97–4241983—Subsec. (c)(2). struck out “and lubricating oil” after “gasoline”.

Pub. L. 96–4991980—Subsec. (a)(3). added par. (3).

Pub. L. 95–6001978—Subsec. (a). substituted in subsec. (a) heading “Imposition of tax” for “Normal tax and surtax” and in par. (1) heading “In general” for “Imposition of tax”.

Pub. L. 94–4551976—Subsecs. (c)(1)(A), (2), (d). struck out “or his delegate” after “Secretary”.

Pub. L. 89–8091966— substantially revised the income tax treatment of foreign corporations, introduced the concept of taxable income effectively connected with the conduct of a trade or business within the United States into provisions dealing with the imposition of tax, substituted a concept of gross income that included gross income derived from sources within the United States not effectively connected with the conduct of a trade or business within the United States and gross income effectively connected with the conduct of a trade or business within the United States for a concept of gross income that included only gross income from sources within the United States, and inserted provisions for an election to treat real property income as income connected with United States business, treatment of interest on United States obligations received by banks organized in possessions, and the returns of tax by agents, and inserted cross reference to section 906(b)(1).

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Pub. L. 117–169section 10101(f) of Pub. L. 117–169section 11 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

Effective Date of 2017 Amendment

section 12001(b)(14) of Pub. L. 115–97section 12001(c) of Pub. L. 115–97section 11 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

section 13001(b)(2)(L) of Pub. L. 115–97section 13001(c)(1) of Pub. L. 115–97section 11 of this titleAmendment by applicable to taxable years beginning after , see , set out as a note under .

section 14401(d)(2) of Pub. L. 115–97section 59A(d) of this titlesection 14401(e) of Pub. L. 115–97section 26 of this titleAmendment by applicable to base erosion payments (as defined in ) paid or accrued in taxable years beginning after , see , set out as a note under .

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 1988 Amendment

section 701(e)(4)(F) of Pub. L. 100–647Pub. L. 99–514section 1019(a) of Pub. L. 100–647section 1 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, , to which such amendment relates, see , set out as a note under .

Pub. L. 100–647Pub. L. 99–499, title Vsection 2001(e) of Pub. L. 100–647section 56 of this titleAmendment by effective, except as otherwise provided, as if included in the provision of the Superfund Revenue Act of 1986, , to which it relates, see , set out as a note under .

Pub. L. 100–647, title VI, § 6133(c)102 Stat. 3721

“The amendments made by this subsection [probably means ‘this section’, which amended sections 882 and 884 of this title] shall apply to taxable years beginning after .”
, , , provided that:

Effective Date of 1986 Amendment

section 701(e)(4)(F) of Pub. L. 99–514section 701(f) of Pub. L. 99–514section 55 of this titleAmendment by applicable to taxable years beginning after , with certain exceptions and qualifications, see , set out as an Effective Date note under .

Pub. L. 99–514, title XII, § 1236(b)100 Stat. 2576

“The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after .”
, , , provided that:

Effective Date of 1984 Amendment

Pub. L. 98–369section 475(a) of Pub. L. 98–369section 21 of this titleAmendment by applicable to taxable years beginning after , and to carrybacks from such years, see , set out as a note under .

Effective Date of 1983 Amendment

Pub. L. 97–424section 515(c) of Pub. L. 97–424section 34 of this titleAmendment by applicable with respect to articles sold after , see , set out as a note under .

Effective Date of 1980 Amendment

Pub. L. 96–499section 1125(a) of Pub. L. 96–499section 897 of this titleAmendment by applicable to disposition after , see , set out as an Effective Date note under .

Effective Date of 1978 Amendment

Pub. L. 95–600section 301(c) of Pub. L. 95–600section 11 of this titleAmendment by applicable to 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 .

Pub. L. 99–514Applicability of Certain Amendments by in Relation to Treaty Obligations of United States

section 701(e)(4)(F) of Pub. L. 99–514Pub. L. 100–647Pub. L. 99–514Pub. L. 100–647section 861 of this titleFor applicability of amendment by notwithstanding any treaty obligation of the United States in effect on , with provision that for such purposes any amendment by title I of be treated as if it had been included in the provision of to which such amendment relates, see section 1012(aa)(2), (4) of , set out as a note under .