Sec.
951. Amounts included
in gross income of United
States shareholders
26
U.S.C. § 951
(a)
Amounts included
(1)
In general
If
a foreign corporation
is a controlled foreign
corporation for an
uninterrupted period
of 30 days or more
during any taxable
year, every person
who is a United States
shareholder (as defined
in subsection (b))
of such corporation
and who owns (within
the meaning of section
958(a)) stock in such
corporation on the
last day, in such year,
on which such corporation
is a controlled foreign
corporation shall include
in his gross income,
for his taxable year
in which or with which
such taxable year of
the corporation ends--
(A)
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income withdrawn from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subpart F income withdrawn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
(B)
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)).
(2)
Pro rata share of subpart
F income
(The
pro rata share referred
to in paragraph (1)(A)(i)
in the case of any
United States shareholder
is the amount--
(A)
which would have been
distributed with respect
to the stock which
such shareholder owns
(within the meaning
of section 958(a))
in such corporation
if on the last day,
in its taxable year,
on which the corporation
is a controlled foreign
corporation it had
distributed pro rata
to its shareholders
an amount (i) which
bears the same ratio
to its subpart F income
for the taxable year,
as (ii) the part of
such year during which
the corporation is
a controlled foreign
corporation bears to
the entire year, reduced
by
(B)
the amount of distributions
received by any other
person during such
year as a dividend
with respect to such
stock, but only to
the extent of the dividend
which would have been
received if the distribution
by the corporation
had been the amount
(i) which bears the
same ratio to the subpart
F income of such corporation
for the taxable year,
as (ii) the part of
such year during which
such shareholder did
not own (within the
meaning of section
958(a)) such stock
bears to the entire
year.
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.
(3)
Limitation on pro rata
share of previously
excluded subpart F
income withdrawn from
investment
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.
(b)
United States shareholder
defined
For
purposes of this subpart,
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.
(c)
Coordination with election
of a foreign investment
company to distribute
income
A
United States shareholder
who, for his taxable
year, is a qualified
shareholder (within
the meaning of section
1247(c)) of a foreign
investment company
with respect to which
an election under section
1247 is in effect shall
not be required to
include in gross income,
for such taxable year,
any amount under subsection
(a) with respect to
such company.
(d)
Coordination with foreign
personal holding 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 551(b) (relating
to foreign personal
holding company income
included in gross income
of United States shareholder),
such amount shall be
included in the gross
income of such shareholder
only under subsection
(a)(1)(A).
(e)
Foreign trade income
not taken into account
(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.
(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)).
(f)
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).
