# 26 U.S.C. § 853: Foreign tax credit allowed to shareholders Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 853(a)(1). ## § 853(a) General rule A regulated investment company— **§ 853(a)(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 **§ 853(a)(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. ## § 853(b) Effect of election If the election provided in subsection (a) is effective for a taxable year— **§ 853(b)(1)** the regulated investment company— **§ 853(b)(1)(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 **§ 853(b)(1)(B)** shall be allowed as an addition to the dividends paid deduction for such taxable year the amount of such taxes; **§ 853(b)(2)** each shareholder of such investment company shall— **§ 853(b)(2)(A)** include in gross income and treat as paid by him his proportionate share of such taxes, and **§ 853(b)(2)(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. ## § 853(c) Statements to shareholders The amounts to be treated by the shareholder, for purposes of subsection (b)(2), as his proportionate share of— **§ 853(c)(1)** taxes paid to any foreign country or possession of the United States, and **§ 853(c)(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. ## § 853(d) Manner of making election The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe by regulations. ## § 853(e) Treatment of certain taxes not allowed as a credit under section 901 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 subsection (k) or (l) of such section. ## § 853(f) Cross references **§ 853(f)(1)** For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section 164(a) and section 901. **§ 853(f)(2)** For definition of foreign corporation, see section 7701(a)(5). ## Regulations - [Treas. Reg. § 1.853-1](/26/reg/1.853-1.md): Foreign tax credit allowed to shareholders. (interprets § 853) - [Treas. Reg. § 1.853-2](/26/reg/1.853-2.md): Effect of election. (interprets § 853) - [Treas. Reg. § 1.853-3](/26/reg/1.853-3.md): Notice to shareholders. (interprets § 853) - [Treas. Reg. § 1.853-4](/26/reg/1.853-4.md): Manner of making election. (interprets § 853) ## Forms named in the regulations - [Form 1118](https://www.irs.gov/pub/irs-pdf/f1118.pdf) ## Final rules - [72 FR 48551](https://www.federalregister.gov/documents/2007/08/24/E7-16737/elimination-of-country-by-country-reporting-to-shareholders-of-foreign-taxes-paid-by-regulated) (2007): Elimination of Country-by-Country Reporting to Shareholders of Foreign Taxes Paid by Regulated Investment Companies ## Connections Cites: § 164 Taxes; § 851 Definition of regulated investment company; § 852 Taxation of regulated investment companies and their shareholders; § 901 Taxes of foreign countries and of possessions of United States; § 7701 Definitions Cited by: § 852 Taxation of regulated investment companies and their shareholders; § 855 Dividends paid by regulated investment company after close of taxable year; § 901 Taxes of foreign countries and of possessions of United States ## Amendments - 1954-08-16: [Act Aug. 16, 1954, ch. 736](/26/act/1954-ch736.md), 68A Stat. 272 - 1964-02-26: [Pub. L. 88-272](/26/act/88-272.md), 78 Stat. 99 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834 - 1986-10-22: [Pub. L. 99-514](/26/act/99-514.md), 100 Stat. 2299 - 1997-08-05: [Pub. L. 105-34](/26/act/105-34.md), 111 Stat. 943 - 1998-07-22: [Pub. L. 105-206](/26/act/105-206.md), 112 Stat. 815 - 2005-12-21: [Pub. L. 109-135](/26/act/109-135.md), 119 Stat. 2630 - 2010-12-22: [Pub. L. 111-325](/26/act/111-325.md), 124 Stat. 3544