US Code

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

26 U.S.C. § 951

Amounts included in gross income of United States shareholders

(a)

Amounts included

(1)

In general

If a foreign corporation is a controlled foreign corporation at any time during a taxable year of the foreign corporation (in this subsection referred to as the “CFC year”)—
(A)
each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder’s pro rata share (determined under paragraph (2)) of the corporation’s subpart F income for the CFC year, and
(B)
each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on the last day, in the CFC year, on which such corporation is a controlled foreign corporation shall include in gross income the amount determined under section 956 with respect to such shareholder for the CFC year (but only to the extent not excluded from gross income under section 959(a)(2)).
(2)

Pro rata share of subpart F income

A United States shareholder’s pro rata share of a controlled foreign corporation’s subpart F income for a CFC year shall be the portion of such income which is attributable to—
(A)
the stock of such corporation owned (within the meaning of section 958(a)) by such shareholder, and
(B)
any period of the CFC year during which—
(i)
such shareholder owned (within the meaning of section 958(a)) such stock,
(ii)
such shareholder was a United States shareholder of such corporation, and
(iii)
such corporation was a controlled foreign corporation.
(3)

Taxable year of inclusion

Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder’s taxable year which includes the last day on which the shareholder owns (within the meaning of section 958(a)) stock in the controlled foreign corporation during such CFC year.

(4)

Regulatory authority

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance allowing taxpayers to elect, or requiring taxpayers, to close the taxable year of a controlled foreign corporation upon a direct or indirect disposition of stock of such corporation.

(b)

United States shareholder defined

For purposes of this title, the term “United States shareholder” means, with respect to any foreign corporation, a United States person (as defined in section 957(c)) who owns (within the meaning of section 958(a)), or is considered as owning by applying the rules of ownership of section 958(b), 10 percent or more of the total combined voting power of all classes of stock entitled to vote of such foreign corporation, or 10 percent or more of the total value of shares of all classes of stock of such foreign corporation.

(c)

Coordination with passive foreign investment company provisions

If, but for this subsection, an amount would be included in the gross income of a United States shareholder for any taxable year both under subsection (a)(1)(A)(i) and under section 1293 (relating to current taxation of income from certain passive foreign investment companies), such amount shall be included in the gross income of such shareholder only under subsection (a)(1)(A).

Pub. L. 87–834, § 12(a)76 Stat. 1006Pub. L. 94–12, title VI, § 602(a)(3)(B)89 Stat. 58Pub. L. 94–455, title XIX, § 1901(a)(119)90 Stat. 1784Pub. L. 98–369, div. A, title I, § 132(c)(1)98 Stat. 666Pub. L. 99–514, title XII, § 1235(c)100 Stat. 2574Pub. L. 100–647, title I, § 1012(i)(15)102 Stat. 3510Pub. L. 103–66, title XIII107 Stat. 495Pub. L. 104–188, title I, § 1501(a)(1)110 Stat. 1825Pub. L. 105–34, title XI, § 1112(a)(1)111 Stat. 969Pub. L. 108–357, title IV, § 413(c)(16)118 Stat. 1508Pub. L. 110–172, § 11(g)(13)121 Stat. 2490Pub. L. 115–97, title I131 Stat. 2192Pub. L. 119–21, title VII, § 70354(a)139 Stat. 210(Added , , ; amended , (c)(3), (4), (d)(2), , , 62; , , ; , title VIII, § 801(d)(4), , , 996; , title XVIII, § 1876(c)(2), , , 2898; , , ; , §§ 13231(a), 13232(c), , , 502; , , ; , , ; , , ; , , ; , §§ 14101(e)(1), 14212(b)(1)(A), (2), 14214(a), 14215(a), , , 2217, 2218; , , .)

Editorial Notes

Amendments

Pub. L. 119–212025—Subsec. (a). amended subsec. (a) generally. Prior to amendment, subsec. (a) consisted of pars. (1) and (2) relating to amounts included in gross income of United States shareholders in general and pro rata share of subpart F income, respectively.

Pub. L. 115–97, § 14215(a)2017—Subsec. (a)(1). , substituted “at any time” for “for an uninterrupted period of 30 days or more” in introductory provisions.

Pub. L. 115–97, § 14212(b)(1)(A)Subsec. (a)(1)(A). , amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “the sum of—

“(i) his pro rata share (determined under paragraph (2)) of the corporation’s subpart F income for such year,

“(ii) his pro rata share (determined under section 955(a)(3) as in effect before the enactment of the Tax Reduction Act of 1975) of the corporation’s previously excluded subpart F income withdrawn from investment in less developed countries for such year, and

“(iii) his pro rata share (determined under section 955(a)(3)) of the corporation’s previously excluded subpart F income withdrawn from foreign base company shipping operations for such year; and”.

Pub. L. 115–97, § 14212(b)(2)Subsec. (a)(3). , struck out par. (3). Text read as follows: “For purposes of paragraph (1)(A)(iii), the pro rata share of any United States shareholder of the previously excluded subpart F income of a controlled foreign corporation withdrawn from investment in foreign base company shipping operations shall not exceed an amount—

“(A) which bears the same ratio to his pro rata share of such income withdrawn (as determined under section 955(a)(3)) for the taxable year, as

“(B) the part of such year during which the corporation is a controlled foreign corporation bears to the entire year.”

Pub. L. 115–97, § 14214(a)Subsec. (b). , inserted “, or 10 percent or more of the total value of shares of all classes of stock of such foreign corporation” after “such foreign corporation”.

Pub. L. 115–97, § 14101(e)(1), substituted “title” for “subpart”.

Pub. L. 110–1722007—Subsecs. (c), (d). redesignated subsec. (d) as (c) and struck out heading and text of former subsec. (c). Text read as follows:

In general“(1) .—The foreign trade income of a FSC and any deductions which are apportioned or allocated to such income shall not be taken into account under this subpart.

Foreign trade income“(2) .—For purposes of this subsection, the term ‘foreign trade income’ has the meaning given such term by section 923(b), but does not include section 923(a)(2) non-exempt income (within the meaning of section 927(d)(6)).”

Pub. L. 108–3572004—Subsecs. (c) to (f). redesignated subsecs. (e) and (f) as (c) and (d), respectively, and struck out former subsecs. (c) and (d), which related to coordination of provisions with election of a foreign investment company to distribute income and coordination with foreign personal holding company provisions, respectively.

Pub. L. 105–341997—Subsec. (a)(2). inserted concluding provisions “For purposes of subparagraph (B), any gain included in the gross income of any person as a dividend under section 1248 shall be treated as a distribution received by such person with respect to the stock involved.”

Pub. L. 104–1881996—Subsec. (a)(1)(A) to (C). inserted “and” at end of subpar. (A), substituted period for “; and” at end of subpar. (B), and struck out subpar. (C) which read as follows: “the amount determined under section 956A with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(3)).”

Pub. L. 103–66, § 13232(c)(1)1993—Subsec. (a)(1)(B). , substituted “the amount determined under section 956 with respect to such shareholder for such year (but only to the extent not excluded from gross income under section 959(a)(2)); and” for “his pro rata share (determined under section 956(a)(2)) of the corporation’s increase in earnings invested in United States property for such year (but only to the extent not excluded from gross income under section 959(a)(2)); and”.

Pub. L. 103–66, § 13231(a)Subsec. (a)(1)(C). , added subpar. (C).

Pub. L. 103–66, § 13232(c)(2)Subsec. (a)(4). , struck out heading and text of par. (4). Text read as follows: “For purposes of paragraph (1)(B), the pro rata share of any United States shareholder in the increase of the earnings of a controlled foreign corporation invested in United States property shall not exceed an amount (A) which bears the same ratio to his pro rata share of such increase (as determined under section 956(a)(2)) for the taxable year, as (B) the part of such year during which the corporation is a controlled foreign corporation bears to the entire year.”

Pub. L. 100–6471988—Subsec. (b). substituted “section 957(c)” for “section 957(d)”.

Pub. L. 99–514, § 1876(c)(2)1986—Subsec. (e)(1). , struck out last sentence which read as follows: “For purposes of the preceding sentence, income described in paragraph (2) or (3) of section 921(d) shall be treated as derived from sources within the United States.”

Pub. L. 99–514, § 1235(c)Subsec. (f). , added subsec. (f).

Pub. L. 98–369, § 132(c)(1)section 551(b) of this titlesection 551(b) of this title1984—Subsec. (d). , amended subsec. (d) generally, substituting provision that, if a United States shareholder is required to include in gross income an amount under both subsec. (a)(1)(A)(ii) of this section and , such amount be included only under subsec. (a)(1)(A)(ii) of this section for provision that, if a United States shareholder is subject to tax under , such shareholder not be required to include as gross income any amount under subsec. (a) of this section.

Pub. L. 98–369, § 801(d)(4)Subsec. (e). , added subsec. (e).

Pub. L. 94–4551976—Subsec. (a)(1). struck out “beginning after ” after “during any taxable year”.

Pub. L. 94–12, § 602(a)(3)(B)1975—Subsec. (a)(1)(A)(i). , struck out “except as provided in section 963,” before “his pro rata share”.

Pub. L. 94–12, § 602(c)(3)Subsec. (a)(1)(A)(ii). , substituted “(determined under section 955(a)(3) as in effect before the enactment of the Tax Reduction Act of 1975)” for “(determined under section 955(a)(3))”.

Pub. L. 94–12, § 602(d)(2)(A)Subsec. (a)(1)(A)(iii). , added cl. (iii).

Pub. L. 94–12, § 602(c)(4)Subsec. (a)(3). , (d)(2)(B), substituted “paragraph (i)(A)(iii)” for “paragraph (1)(A)(ii)” and “foreign base company shipping operations” for “less developed countries”.

Statutory Notes and Related Subsidiaries

Effective Date of 2025 Amendment

Pub. L. 119–21, title VII, § 70354(c)139 Stat. 212

“(1)

In general .—

section 951A of this titleThe amendments made by this section [amending this section and ] shall apply to taxable years of foreign corporations beginning after .
“(2)

Transition rule for dividends .—

Except to the extent provided by the Secretary of the Treasury (or the Secretary’s delegate), a dividend paid (or deemed paid) by a controlled foreign corporation shall not be treated as a dividend for purposes of applying section 951(a)(2)(B) of the Internal Revenue Code of 1986 (as in effect before the amendments made by this section) if—
“(A)
such dividend—
“(i)
was paid (or deemed paid) on or before , during the taxable year of such controlled foreign corporation which includes such date and the United States shareholder described in section 951(a)(1) of such Code (as so in effect) did not own (within the meaning of section 958(a) of such Code) the stock of such controlled foreign corporation during the portion of such taxable year on or before , or
“(ii)
was paid (or deemed paid) after , and before such controlled foreign corporation’s first taxable year beginning after , and
“(B)
such dividend does not increase the taxable income of a United States person that is subject to Federal income tax for the taxable year (including by reason of a dividends received deduction, an exclusion from gross income, or an exclusion from subpart F income).”
, , , provided that:

Effective Date of 2017 Amendment

section 14101(e)(1) of Pub. L. 115–97section 14101(f) of Pub. L. 115–97section 245A of this titleAmendment by applicable to distributions made after , see , set out as an Effective Date note under .

Pub. L. 115–97section 14212(c) of Pub. L. 115–97section 851 of this titleAmendment by section 14212(b)(1)(A), (2) of applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see , set out as a note under .

Pub. L. 115–97, title I, § 14214(b)131 Stat. 2218

“The amendment made by this section [amending this section] shall apply to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.”
, , , provided that:

Pub. L. 115–97, title I, § 14215(b)131 Stat. 2218

“The amendment made by this section [amending this section] shall apply to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.”
, , , provided that:

Effective Date of 2004 Amendment

Pub. L. 108–357section 413(d)(1) of Pub. L. 108–357section 1 of this titleAmendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see , set out as an Effective and Termination Dates of 2004 Amendments note under .

Effective Date of 1997 Amendment

Pub. L. 105–34, title XI, § 1112(a)(2)111 Stat. 969

“The amendment made by paragraph (1) [amending this section] shall apply to dispositions after the date of the enactment of this Act [].”
, , , provided that:

Effective Date of 1996 Amendment

Pub. L. 104–188section 1501(d) of Pub. L. 104–188section 904 of this titleAmendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders within which or with which such taxable years of foreign corporations end, see , set out as a note under .

Effective Date of 1993 Amendment

Pub. L. 103–66, title XIII, § 13231(e)107 Stat. 501

section 956A of this title“The amendments made by this section [enacting and amending this section and sections 959, 989, 1293, 1296, and 1297 of this title] shall apply to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.”
, , , provided that:

Pub. L. 103–66, title XIII, § 13232(d)107 Stat. 502

section 956 of this title“The amendments made by this section [amending this section and ] shall apply to taxable years of controlled foreign corporations beginning after , and to taxable years of United States shareholders in which or with which such taxable years of controlled foreign corporations end.”
, , , provided that:

Effective Date of 1988 Amendment

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 .

Effective Date of 1986 Amendment

section 1235(c) of Pub. L. 99–514section 1235(h) of Pub. L. 99–514section 1291 of this titleAmendment by applicable to taxable years of foreign corporations beginning after , see , set out as an Effective Date note under .

section 1876(c)(2) of Pub. L. 99–514Pub. L. 98–369, div. Asection 1881 of Pub. L. 99–514section 48 of this titleAmendment by effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, , to which such amendment relates, see , set out as a note under .

Effective Date of 1984 Amendment

Pub. L. 98–369, div. A, title I, § 132(d)(2)(A)98 Stat. 667

“The amendment made by paragraph (1) of subsection (c) [amending this section] shall apply to taxable years of United States shareholders beginning after the date of the enactment of this Act [].”
, , , provided that:

section 801(d)(4) of Pub. L. 98–369section 805(a)(1) of Pub. L. 98–369section 245 of this titleAmendment by applicable to transactions after , in taxable years ending after such date, see , as amended, set out as a note under .

Effective Date of 1975 Amendment

Pub. L. 94–12section 602(f) of Pub. L. 94–12section 954 of this titleAmendment by applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders (within the meaning of 951(b) of this title) within which or with which such taxable years of such foreign corporations end, see , set out as a note under .

Effective Date

Pub. L. 87–834, § 12(c)76 Stat. 1031

“The amendments made by this section [enacting this section and sections 952 to 964 and 970 to 972 of this title and amending sections 901, 904, and 1016 of this title] shall apply with respect to taxable years of foreign corporations beginning after , and to taxable year of United States shareholders within which or with which such taxable years of such foreign corporations end.”
, , , provided that:

Plan Amendments Not Required Until January 1, 1989

Pub. L. 99–514section 1140 of Pub. L. 99–514section 401 of this titleFor provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after , see , as amended, set out as a note under .