Amended 1984, 1986, 2004, 2007
- 2007 Pub. L. 110-172 Pub. L. 110–172 redesignated subsec. (d) as (c) and struck out heading and text of former subsec. (c). Text read as follows:
- 2007 “(1) In general.—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.
- 2007 “(2) Foreign trade income.—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)).”
- 2004 Pub. L. 108-357 Pub. L. 108–357 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.
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1876(c)(2), 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.”
- 1986 Pub. L. 99-514 Pub. L. 99–514, § 1235(c), added subsec. (f).
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 132(c)(1), 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 section 551(b) of this title, 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 section 551(b) of this title, such shareholder not be required to include as gross income any amount under subsec. (a) of this section.
- 1984 Pub. L. 98-369 Pub. L. 98–369, § 801(d)(4), added subsec. (e).
Cases: Dougherty v. Commissioner, 60 T.C. 917 (1973)
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(a) Amounts included
Amended 2025
- 2025 Pub. L. 119-21 Pub. L. 119–21 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.
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(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”)—
Amended 1976, 1993, 1996, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 14215(a), substituted “at any time” for “for an uninterrupted period of 30 days or more” in introductory provisions.
- 1996 Pub. L. 104-188 Pub. L. 104–188 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)).”
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13231(a), added subpar. (C).
- 1976 Pub. L. 94-455 Pub. L. 94–455 struck out “beginning after December 31, 1962” after “during any taxable year”.
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(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
Amended 1975, 1996, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 14212(b)(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”.
- 1996 Pub. L. 104-188 Pub. L. 104–188 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)).”
- 1975 Pub. L. 94-12 Pub. L. 94–12, § 602(a)(3)(B), struck out “except as provided in section 963,” before “his pro rata share”.
- 1975 Pub. L. 94-12 Pub. L. 94–12, § 602(c)(3), 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))”.
- 1975 Pub. L. 94-12 Pub. L. 94–12, § 602(d)(2)(A), added cl. (iii).
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(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)).
Amended 1993, 1996
- 1996 Pub. L. 104-188 Pub. L. 104–188 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)).”
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13232(c)(1), 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”.
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(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—
Amended 1997
- 1997 Pub. L. 105-34 Pub. L. 105–34 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.”
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(A) the stock of such corporation owned (within the meaning of section 958(a)) by such shareholder, and
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(B) any period of the CFC year during which—
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(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.
Amended 1975, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 14212(b)(2), 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.”
- 1975 Pub. L. 94-12 Pub. L. 94–12, § 602(c)(4), (d)(2)(B), substituted “paragraph (i)(A)(iii)” for “paragraph (1)(A)(ii)” and “foreign base company shipping operations” for “less developed countries”.
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(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.
Amended 1993
- 1993 Pub. L. 103-66 Pub. L. 103–66, § 13232(c)(2), 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.”
(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.
Amended 1988, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 14214(a), 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”.
- 2017 Pub. L. 115-97 Pub. L. 115–97, § 14101(e)(1), substituted “title” for “subpart”.
- 1988 Pub. L. 100-647 Pub. L. 100–647 substituted “section 957(c)” for “section 957(d)”.
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(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).
Amended 2004, 2007
- 2007 Pub. L. 110-172 Pub. L. 110–172 redesignated subsec. (d) as (c) and struck out heading and text of former subsec. (c). Text read as follows:
- 2007 “(1) In general.—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.
- 2007 “(2) Foreign trade income.—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)).”
- 2004 Pub. L. 108-357 Pub. L. 108–357 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.