# 26 U.S.C. § 638: Continental shelf areas

Source: OLRC release point 119-134 <https://uscode.house.gov/us/usc/119-134/t26/s638>. Cite pinpoints as 26 U.S.C. § 638(a)(1).

For purposes of applying the provisions of this chapter (including sections 861(a)(3) and 862(a)(3) in the case of the performance of personal services) with respect to mines, oil and gas wells, and other natural deposits—

## § 638(1)

the term “United States” when used in a geographical sense includes the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the United States and over which the United States has exclusive rights, in accordance with international law, with respect to the exploration and exploitation of natural resources; and

## § 638(2)

the terms “foreign country” and “possession of the United States” when used in a geographical sense include the seabed and subsoil of those submarine areas which are adjacent to the territorial waters of the foreign country or such possession and over which the foreign country (or the United States in case of such possession) has exclusive rights, in accordance with international law, with respect to the exploration and exploitation of natural resources, but this paragraph shall apply in the case of a foreign country only if it exercises, directly or indirectly, taxing jurisdiction with respect to such exploration or exploitation.

No foreign country shall, by reason of the application of this section, be treated as a country contiguous to the United States.

## Regulations

- [Treas. Reg. § 1.638-1](/26/reg/1.638-1.md): Continental Shelf areas. (interprets § 638)
- [Treas. Reg. § 1.638-2](/26/reg/1.638-2.md): Effective date. (interprets § 638)

## Leading cases

- [FMC Corp. v. Commissioner, 100 T.C. 595 (1993)](https://www.courtlistener.com/opinion/4694862/fmc-corp-v-commissioner/)
- [Adams Challenge (UK) Ltd. v. Commissioner, 154 T.C. No. 3 (2020)](https://www.courtlistener.com/opinion/4693241/adams-challenge-uk-limited-v-commissioner/)

## Connections

Cites: none

Cited by: § 43 Enhanced oil recovery credit; § 45 Electricity produced from certain renewable resources, etc.; § 45K Credit for producing fuel from a nonconventional source; § 45Q Credit for carbon oxide sequestration; § 45V Credit for production of clean hydrogen; § 45X Advanced manufacturing production credit; § 45Y Clean electricity production credit; § 167 Depreciation; § 863 Special rules for determining source; § 1441 Withholding of tax on nonresident aliens; § 4121 Imposition of tax; § 4612 Definitions and special rules

## Amendments

- 1969-12-30: [Pub. L. 91-172](/26/act/91-172.md), 83 Stat. 634