# 26 U.S.C. § 962: Election by individuals to be subject to tax at corporate rates Source: OLRC release point 119-134 . Cite pinpoints as 26 U.S.C. § 962(a)(1). ## § 962(a) General rule Under regulations prescribed by the Secretary, in the case of a United States shareholder who is an individual and who elects to have the provisions of this section apply for the taxable year— **§ 962(a)(1)** the tax imposed under this chapter on amounts which are included in his gross income under section 951(a) shall (in lieu of the tax determined under sections 1 and 55) be an amount equal to the tax which would be imposed under section 11 if such amounts were received by a domestic corporation, and **§ 962(a)(2)** for purposes of applying the provisions of section 960 [OLRC note: See References in Text note below.] (relating to foreign tax credit) such amounts shall be treated as if they were received by a domestic corporation. ## § 962(b) Election An election to have the provisions of this section apply for any taxable year shall be made by a United States shareholder at such time and in such manner as the Secretary shall prescribe by regulations. An election made for any taxable year may not be revoked except with the consent of the Secretary. ## § 962(c) Pro ration of each section 11 bracket amount For purposes of applying subsection (a)(1), the amount in each taxable income bracket in the tax table in section 11(b) shall not exceed an amount which bears the same ratio to such bracket amount as the amount included in the gross income of the United States shareholder under section 951(a) for the taxable year bears to such shareholder’s pro rata share of the earnings and profits for the taxable year of all controlled foreign corporations with respect to which such shareholder includes any amount in gross income under section 951(a). ## § 962(d) Special rule for actual distributions The earnings and profits of a foreign corporation attributable to amounts which were included in the gross income of a United States shareholder under section 951(a) and with respect to which an election under this section applied shall, when such earnings and profits are distributed, notwithstanding the provisions of section 959(a)(1), be included in gross income to the extent that such earnings and profits so distributed exceed the amount of tax paid under this chapter on the amounts to which such election applied. ## Regulations - [Treas. Reg. § 1.962-1](/26/reg/1.962-1.md): Limitation of tax for individuals on amounts included in gross income under section 951(a). (interprets § 962) - [Treas. Reg. § 1.962-2](/26/reg/1.962-2.md): Election of limitation of tax for individuals. (interprets § 962) - [Treas. Reg. § 1.962-3](/26/reg/1.962-3.md): Treatment of actual distributions. (interprets § 962) ## Final rules - [85 FR 43042](https://www.federalregister.gov/documents/2020/07/15/2020-14649/deduction-for-foreign-derived-intangible-income-and-global-intangible-low-taxed-income) (2020): Deduction for Foreign-Derived Intangible Income and Global Intangible Low-Taxed Income - [84 FR 9231](https://www.federalregister.gov/documents/2019/03/14/2019-03474/eliminating-unnecessary-tax-regulations) (2019): Eliminating Unnecessary Tax Regulations - [84 FR 1838](https://www.federalregister.gov/documents/2019/02/05/2019-00265/regulations-regarding-the-transition-tax-under-section-965-and-related-provisions) (2019): Regulations Regarding the Transition Tax Under Section 965 and Related Provisions ## Leading cases - [Dougherty v. Commissioner, 60 T.C. 917 (1973)](https://www.courtlistener.com/opinion/4703741/dougherty-v-commissioner/) - [Barry M. Smith & Rochelle Smith v. Commissioner, 151 T.C. No. 5 (2018)](https://www.courtlistener.com/opinion/4563914/barry-m-smith-rochelle-smith-v-commissioner/) ## Proposed regulations (not in force) - [Prop. Treas. Reg. § 1.962-1](/26/prop/1.962-1_2024-27227.md): Limitation of tax for individuals on amounts included in gross income under section 951(a). (REG-105479-18, proposed 2024-12-02) - [Prop. Treas. Reg. § 1.962-3](/26/prop/1.962-3_2024-27227.md): [Removed]. (REG-105479-18, proposed 2024-12-02) ## Connections Cites: § 11 Tax imposed; § 951 Amounts included in gross income of United States shareholders; § 959 Exclusion from gross income of previously taxed earnings and profits; § 960 Deemed paid credit for subpart F inclusions Cited by: § 961 Adjustments to basis of stock in controlled foreign corporations and of other property ## Amendments - 1962-10-16: [Pub. L. 87-834](/26/act/87-834.md), 76 Stat. 1023 - 1975-03-29: [Pub. L. 94-12](/26/act/94-12.md), 89 Stat. 45 - 1975-12-23: [Pub. L. 94-164](/26/act/94-164.md), 89 Stat. 975 - 1976-10-04: [Pub. L. 94-455](/26/act/94-455.md), 90 Stat. 1834 - 1978-11-06: [Pub. L. 95-600](/26/act/95-600.md), 92 Stat. 2822 - 1988-11-10: [Pub. L. 100-647](/26/act/100-647.md), 102 Stat. 3435 - 2017-12-22: [Pub. L. 115-97](/26/act/115-97.md), 131 Stat. 2094