Exclusion from gross income of United States persons
Exclusion from gross income of certain foreign subsidiaries
For purposes of section 951(a), the earnings and profits of a controlled foreign corporation attributable to amounts which are, or have been, included in the gross income of a United States shareholder under section 951(a), shall not, when distributed through a chain of ownership described under section 958(a), be also included in the gross income of another controlled foreign corporation in such chain for purposes of the application of section 951(a) to such other controlled foreign corporation with respect to such United States shareholder (or to any other United States shareholder who acquires from any person any portion of the interest of such United States shareholder in the controlled foreign corporation, 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).
Allocation of distributions
Distributions excluded from gross income not to be treated as dividends
Any distribution excluded from gross income under subsection (a) shall be treated, for purposes of this chapter, as a distribution which is not a dividend; except that such distributions shall immediately reduce earnings and profits.
Coordination with amounts previously taxed under section 1248
For purposes of this section and section 960(c), any amount included in the gross income of any person as a dividend by reason of subsection (a) or (f) of section 1248 shall be treated as an amount included in the gross income of such person (or, in any case to which section 1248(e) applies, of the domestic corporation referred to in section 1248(e)(2)) under section 951(a)(1)(A).
Allocation rules for certain inclusions
In general
For purposes of this section, amounts that would be included under subparagraph (B) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2), and then to earnings described in subsection (c)(3).
Treatment of distributions
In applying this section, actual distributions shall be taken into account before amounts that would be included under section 951(a)(1)(B) (determined without regard to this section).
Pub. L. 87–834, § 12(a)76 Stat. 1019Pub. L. 94–455, title XIX, § 1906(b)(13)(A)90 Stat. 1834Pub. L. 98–369, div. A, title I, § 133(b)(1)98 Stat. 668Pub. L. 99–514, title XII, § 1226(b)100 Stat. 2560Pub. L. 100–647, title I, § 1012(bb)(7)(A)102 Stat. 3536Pub. L. 103–66, title XIII, § 13231(c)(1)107 Stat. 497Pub. L. 104–188, title I, § 1501(b)(4)110 Stat. 1826Pub. L. 115–97, title I, § 14301(c)(32)131 Stat. 2224(Added , , ; amended , , ; , , ; , , ; , , ; , (2), (4)(A), (B), , , 498; –(8), , ; , (33), , .)
Editorial Notes
References in Text
Pub. L. 104–188The date of the enactment of the Small Business Job Protection Act of 1996, referred to in subsec. (c), is the date of enactment of , which was approved .
Amendments
Pub. L. 115–97, § 14301(c)(32)2017—Subsec. (d). , substituted “Any” for “Except as provided in section 960(a)(3), any”.
Pub. L. 115–97, § 14301(c)(33)Subsec. (e). , substituted “section 960(c)” for “section 960(b)”.
Pub. L. 104–188, § 1501(b)(4)1996—Subsec. (a). , (5), substituted “paragraph (2)” for “paragraphs (2) and (3)” in closing provisions, inserted “or” at end of par. (1), struck out “or” at end of par. (2), and struck out par. (3) which read as follows: “such amounts would, but for this subsection, be included under section 951(a)(1)(C) in the gross income of,”.
Pub. L. 104–188, § 1501(b)(6)Subsec. (c). , inserted at end “References in this subsection to section 951(a)(1)(C) and subsection (a)(3) shall be treated as references to such provisions as in effect on the day before the date of the enactment of the Small Business Job Protection Act of 1996.”
Pub. L. 104–188, § 1501(b)(7)Subsec. (f)(1). , reenacted heading without change and amended text generally. Prior to amendment, text read as follows: “For purposes of this section—
“(A) amounts that would be included under subparagraph (B) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2), and then to earnings described in subsection (c)(3), and
“(B) amounts that would be included under subparagraph (C) of section 951(a)(1) (determined without regard to this section) shall be treated as attributable first to earnings described in subsection (c)(2) to the extent the earnings so described were accumulated in taxable years beginning after , and then to earnings described in subsection (c)(3).”
Pub. L. 104–188, § 1501(b)(8)Subsec. (f)(2). , substituted “section 951(a)(1)(B)” for “subparagraphs (B) and (C) of section 951(a)(1)”.
Pub. L. 103–66, § 13231(c)(2)(A)1993—Subsec. (a). , (4)(A), substituted in introductory provisions “earnings and profits” for “earnings and profits for taxable year” and inserted at end of closing provisions “The rules of subsection (c) shall apply for purposes of paragraph (1) of this subsection and the rules of subsection (f) shall apply for purposes of paragraphs (2) and (3) of this subsection.”
Pub. L. 103–66, § 13231(c)(1)Subsec. (a)(3). , added par. (3).
Pub. L. 103–66, § 13231(c)(4)(A)Subsec. (b). , substituted “earnings and profits” for “earnings and profits for a taxable year”.
Pub. L. 103–66, § 13231(c)(2)(C)Subsec. (c)(1). , amended par. (1) generally. Prior to amendment, par. (1) read as follows: “first to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(B) (or which would have been included except for subsection (a)(2) of this section),”.
Pub. L. 103–66, § 13231(c)(4)(B)Subsec. (c)(2). , amended par. (2) generally. Prior to amendment, par. (2) read as follows: “then to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(A) (but reduced by amounts not included under section 951(a)(1)(B) because of the exclusion in subsection (a)(2) of this section), and”.
Pub. L. 103–66, § 13231(c)(2)(B)Subsec. (f). , added subsec. (f).
Pub. L. 100–6471988—Subsec. (e). substituted “such person (or, in any case to which section 1248(e) applies, of the domestic corporation referred to in section 1248(e)(2)) under” for “such person under”.
Pub. L. 99–5141986—Subsec. (d). inserted “; except that such distributions shall immediately reduce earnings and profits”.
Pub. L. 98–3691984—Subsec. (e). added subsec. (e).
Pub. L. 94–4551976—Subsecs. (a), (b). struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Pub. L. 115–97section 14301(d) of Pub. L. 115–97section 78 of this titleAmendment by 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 .
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. 103–66section 13231(e) of Pub. L. 103–66section 951 of this titleAmendment by 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 .
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1012(bb)(7)(B)102 Stat. 3536
Effective Date of 1986 Amendment
Pub. L. 99–514, title XII, § 1226(c)(2)100 Stat. 2560
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title I, § 133(d)(2)98 Stat. 668Pub. L. 99–514, § 2100 Stat. 2095Pub. L. 100–647, title I, § 1018(g)(2)102 Stat. 3582