(a) General rule For purposes of this title, the taxable year of any specified foreign corporation shall be the required year determined under subsection (c).
(b) Specified foreign corporation For purposes of this section—
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(1) In general The term “specified foreign corporation” means any foreign corporation—
(A) which is treated as a controlled foreign corporation for any purpose under subpart F of part III of this subchapter, and
Amended 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(13)(A), amended subpar. (A) generally. Prior to amendment, subpar (A) read as follows:
- 2004 “(A) which is—
“(i) treated as a controlled foreign corporation for any purpose under subpart F of part III of this subchapter, or
“(ii) a foreign personal holding company (as defined in section 552), and”.
(B) with respect to which the ownership requirements of paragraph (2) are met.
(2) Ownership requirements
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(A) In general The ownership requirements of this paragraph are met with respect to any foreign corporation if a United States shareholder owns, on each testing day, more than 50 percent of—
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(i) the total voting power of all classes of stock of such corporation entitled to vote, or
(ii) the total value of all classes of stock of such corporation.
(B) Ownership For purposes of subparagraph (A), the rules of subsections (a) and (b) of section 958 shall apply in determining ownership.
Amended 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(13)(B), struck out “and sections 551(f) and 554, whichever are applicable,” after “section 958”.
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(3) United States shareholder The term “United States shareholder” has the meaning given to such term by section 951(b), except that, in the case of a foreign corporation having related person insurance income (as defined in section 953(c)(2)), the Secretary may treat any person as a United States shareholder for purposes of this section if such person is treated as a United States shareholder under section 953(c)(1).
Amended 2004
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(13)(C), reenacted heading without change, struck out “(A) In general” before “The term”, and struck out heading and text of subpar. (B). Text read as follows: “In the case of any foreign personal holding company (as defined in section 552) which is not a specified foreign corporation by reason of paragraph (1)(A)(i), the term ‘United States shareholder’ means any person who is treated as a United States shareholder under section 551.”
(c) Determination of required year
Amended 2004, 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21 redesignated par. (3) as (2) and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: “A specified foreign corporation may elect, in lieu of the taxable year under paragraph (1)(A), a taxable year beginning 1 month earlier than the majority U.S. shareholder year.”
- 2004 Pub. L. 108-357 Pub. L. 108–357, § 413(c)(13)(D), reenacted heading without change and amended text of subsec. (c) generally, substituting provisions stating general rule and relating to 1-month deferral and majority U.S. shareholder year, consisting of pars. (1) to (3), for provisions stating general rule and relating to 1-month deferral and majority U.S. shareholder year, consisting of par. (1), and provisions relating to required year in the case of a foreign personal holding company, consisting of par. (2).
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(1) In general The required year is—
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(A) the majority U.S. shareholder year, or
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(B) if there is no majority U.S. shareholder year, the taxable year prescribed under regulations.
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(2) Majority U.S. shareholder year
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21 redesignated par. (3) as (2) and struck out former par. (2). Prior to amendment, text of par. (2) read as follows: “A specified foreign corporation may elect, in lieu of the taxable year under paragraph (1)(A), a taxable year beginning 1 month earlier than the majority U.S. shareholder year.”
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(A) In general For purposes of this subsection, the term “majority U.S. shareholder year” means the taxable year (if any) which, on each testing day, constituted the taxable year of—
(i) each United States shareholder described in subsection (b)(2)(A), and
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(ii) each United States shareholder not described in clause (i) whose stock was treated as owned under subsection (b)(2)(B) by any shareholder described in such clause.