# Prop. Treas. Reg. § 1.959-1: Overview, definitions, and rules of general applicability. Proposed regulation, not in force. REG-105479-18, 89 FR 95362, published 2024-12-02 . Interprets 26 U.S.C. § 959. Par. 18. Section 1.959-1 is revised to read as follows: (a) Overview —(1) In general. The section 959 regulations provide rules regarding previously taxed earnings and profits. This section sets forth definitions and rules of general applicability. Section 1.959-2 sets forth rules for shareholder-level and foreign corporation-level accounting of a foreign corporation's previously taxed earnings and profits. Section 1.959-3 provides the adjustments under section 959 to shareholder-level accounts with respect to a foreign corporation. Section 1.959-4 provides rules for excluding previously taxed earnings and profits received in a distribution from gross income of a covered shareholder or controlled foreign corporation. Section 1.959-5 provides rules for excluding the portion of a section 956 amount that is allocated to previously taxed earnings and profits from gross income of a covered shareholder. Section 1.959-6 provides rules for allocating and apportioning current year taxes paid or accrued by a foreign corporation to its previously taxed earnings and profits. Section 1.959-7 provides rules for transferring previously taxed earnings and profits in a general successor transaction. Sections 1.959-8 through 1.959-9 are reserved. Section 1.959-10 provides examples illustrating the application of the section 959 regulations. Section 1.959-11 sets forth transition rules. Section 1.959-12 sets forth applicability dates. See § 1.1502-59 for additional rules for a consolidated group. (2) Scope. This section sets forth definitions and rules of general applicability for purposes of the section 959 regulations. Paragraph (b) of this section provides definitions. Paragraph (c) of this section provides rules relating to S corporations. Paragraph (d) of this section provides an anti-avoidance rule. (b) Definitions. The following definitions apply for purposes of the section 959 regulations. 2019 notice provisions. The term 2019 notice provisions has the meaning provided in § 1.959-12(c)(2). Acquired foreign corporation. The term acquired foreign corporation has the meaning provided in § 1.959-7(b). Adjusted applicable percentage. The term adjusted applicable percentage has the meaning provided in § 1.959-2(b)(2)(iii)(A). Annual PTEP account. The term annual PTEP account means an account that is described in § 1.959-2(b)(1) and tracks previously taxed earnings and profits. Character. The term character means, with respect to previously taxed earnings and profits, the taxable year, section 904 category, PTEP group and, if applicable, PTEP subgroup to which the previously taxed earnings and profits relate, as well as, if applicable, the adjusted applicable percentage and section 965(c) deduction percentage with respect to the previously taxed earnings and profits. Controlled foreign corporation. The term controlled foreign corporation has the meaning provided in section 957(a) (or, if applicable, section 957(b) or 953(c)(1)(B)). Corporate PTEP account. The term corporate PTEP account has the meaning provided in § 1.959-2(d)(1). Corporate PTEP tax pool. The term corporate PTEP tax pool has the meaning provided in § 1.959-2(d)(2). Covered distribution. The term covered distribution has the meaning provided in § 1.959-4(c). Covered gain. The term covered gain has the meaning provided in § 1.961-9(c). Covered shareholder. The term covered shareholder means a United States person (as described in section 7701(a)(30)), other than a domestic partnership. Creditable PTEP tax group. The term creditable PTEP tax group has the meaning provided in § 1.959-2(b)(4)(ii). Current year taxes. The term current year taxes has the meaning provided in § 1.960-1(b)(4) except that “foreign corporation” is substituted for “controlled foreign corporation” and “the foreign corporation's taxable year” is substituted for “current taxable year”. Deemed covered shareholder. The term deemed covered shareholder has the meaning provided in § 1.959-7(g). Dollar basis pool. The term dollar basis pool means an account that is described in § 1.959-2(b)(1) and that tracks the basis in U.S. dollars of previously taxed earnings and profits. Domestic partnership. The term domestic partnership has the meaning provided in section 7701(a)(2) and (4). See paragraph (c) of this section, providing that an S corporation is treated in the same manner as a domestic partnership. Early application corporation. The term early application corporation has the meaning provided in § 1.959-12(d)(1). Early application years. The term early application years has the meaning provided in § 1.959-12(d)(1). Foreign income taxes. The term foreign income taxes has the meaning provided in § 1.901-2(a). General successor PTEP. The term general successor PTEP has the meaning provided in § 1.959-7(c)(1). General successor transaction. The term general successor transaction has the meaning provided in § 1.959-7(b). GILTI inclusion amount. The term GILTI inclusion amount has the meaning provided in § 1.951A-1(c)(1) (or § 1.1502-51(b) in the case of a member of a consolidated group, as defined in § 1.1502-1(h)). Last relevant day. The term last relevant day means the last day of a taxable year of a foreign corporation on which the foreign corporation is a controlled foreign corporation. Multi-year dollar basis account. The term multi-year dollar basis account has the meaning provided in § 1.959-11(b)(2)(ii)(B). Multi-year PTEP account. The term multi-year PTEP account has the meaning provided in § 1.959-11(b)(2)(ii)(A). Own. The term own (or ownership or owned ), when used with respect to stock of a foreign corporation, means to own the stock within the meaning of section 958(a) and § 1.958-1(a) (thus determined by treating a domestic partnership in the same manner as a foreign partnership pursuant to § 1.958-1(d)). When used with respect to interests in a partnership, own (or ownership or owned ) means to own the interests within the meaning of the preceding sentence, determined by treating the interests as stock of a foreign corporation. Previously taxed earnings and profits. The term previously taxed earnings and profits means earnings and profits of a foreign corporation that are described in section 959(c)(1) or (2). See § 1.959-2(b) and (d) for covered shareholder-level and foreign corporation-level accounting of previously taxed earnings and profits. Prior-law PTEP groups. The term prior-law PTEP groups has the meaning provided in § 1.959-11(c)(2)(iii). Prior-law PTEP group taxes. The term prior-law PTEP group taxes has the meaning provided in § 1.959-11(c)(2)(iii). PTEP group. The term PTEP group means any of the groups listed in § 1.959-2(b)(2)(i). PTEP realization event. The term PTEP realization event has the meaning provided in § 1.959-6(b). PTEP subgroup. The term PTEP subgroup means any of the groups listed in § 1.959-2(b)(2)(ii). PTEP tax pool. The term PTEP tax pool means an account that is described in § 1.959-2(b)(1) and that tracks the U.S. dollar amount of foreign income taxes associated with previously taxed earnings and profits. Relevant taxable year. The term relevant taxable year has the meaning provided in § 1.959-3(b). S corporation. The term S corporation has the meaning provided in section 1361(a)(1). See paragraph (c) of this section, providing that an S corporation is treated in the same manner as a domestic partnership. Same priority PTEP. The term same priority PTEP has the meaning provided in § 1.959-4(e)(5). Section 904 category. The term section 904 category has the meaning provided in § 1.960-1(b). Section 956 amount. The term section 956 amount has the meaning provided in § 1.959-5(c). Section 959 regulations. The term section 959 regulations means the regulations in this part issued under section 959. Section 965(c) deduction percentage. The term section 965(c) deduction percentage has the meaning provided in § 1.959-2(b)(2)(iii)(B). Spot rate. The term spot rate has the meaning provided in § 1.988-1(d). Substituted basis property. The term substituted basis property has the meaning provided in section 7701(a)(42). Successor covered shareholder. The term successor covered shareholder has the meaning provided in § 1.959-7(b). Subpart F income. The term subpart F income has the meaning provided in section 952 and § 1.952-1. Taxable year. The term taxable year has the meaning provided in section 7701(a)(23), determined by treating a person (as described in section 7701(a)(1)) other than an individual that does not otherwise have a taxable year as computing taxable income on the basis of the calendar year. Tested income. The term tested income has the meaning provided in section 951A(c)(2) and § 1.951A-2(b)(1). Tested loss. The term tested loss has the meaning provided in section 951A(c)(2) and § 1.951A-2(b)(2). Transferor covered shareholder. The term transferor covered shareholder has the meaning provided in § 1.959-7(b). United States shareholder. The term United States shareholder has the meaning provided in section 951(b) (or, if applicable, section 953(c)(1)(A)). (c) Treatment of an S corporation —(1) In general. Except as provided in paragraph (c)(2) of this section, for purposes of the section 959 regulations, an S corporation is treated in the same manner as a domestic partnership, a reference to a domestic partnership includes an S corporation, and shareholders of an S corporation are treated as partners of such partnership. See section 1373(a). As applicable, the treatment of an S corporation and its shareholders under the preceding sentence is determined by replacing any partnership-specific provision with the equivalent provision for S corporations (for example, a reference to a partner's distributive share of a partnership's income refers to a shareholder's pro rata share of an S corporation's income). (2) Treatment as a covered shareholder for taxable years for which elective entity treatment applies for § 1.958-1(d)(1) purposes. See § 1.959-11(d) for a rule treating an S corporation as a covered shareholder for any taxable year of the S corporation for which § 1.958-1(d)(1) does not apply and § 1.959-11(e) for a transition rule converting S corporation-level accounts (for example, annual PTEP accounts) to accounts of covered shareholders owning interests in the S corporation once the S corporation is no longer treated as a covered shareholder. (d) Anti-avoidance rule. If a transaction, series of transactions, plan, or arrangement is engaged in with a principal purpose of avoiding the purposes of section 959 and the section 959 regulations, then appropriate adjustments are made, which may include adjustments to disregard the transaction, series of transactions, plan, or arrangement.