Sec.
957. Controlled foreign
corporations; United
States persons
26
U.S.C. § 957
(a)
General rule
For
purposes of this subpart,
the term "controlled foreign corporation" means any foreign corporation if more than 50 percent of--
(1)
the total combined
voting power of all
classes of stock of
such corporation entitled
to vote, or
(2)
the total value of
the stock of such corporation,
is
owned (within the meaning
of section 958(a)),
or is considered as
owned by applying the
rules of ownership
of section 958(b),
by United States shareholders
on any day during the
taxable year of such
foreign corporation.
(b)
Special rule for insurance
For
purposes only of taking
into account income
described in section
953(a) (relating to
insurance income),
the term "controlled foreign corporation" includes not only a foreign corporation as defined by subsection (a) but also
one of which more than
25 percent of the total
combined voting power
of all classes of stock
(or more than 25 percent
of the total value
of stock) is owned
(within the meaning
of section 958(a)),
or is considered as
owned by applying the
rules of ownership
of section 958(b),
by United States shareholders
on any day during the
taxable year of such
corporation, if the
gross amount of premiums
or other consideration
in respect of the reinsurance
or the issuing of insurance
or annuity contracts
described in section
953(a)(1) exceeds 75
percent of the gross
amount of all premiums
or other consideration
in respect of all risks.
(c)
United States person
For
purposes of this subpart,
the term "United States person" has the meaning assigned to it by section 7701(a)(30) except that--
(1)
with respect to a corporation
organized under the
laws of the Commonwealth
of Puerto Rico, such
term does not include
an individual who is
a bona fide resident
of Puerto Rico, if
a dividend received
by such individual
during the taxable
year from such corporation
would, for purposes
of section 933(1),
be treated as income
derived from sources
within Puerto Rico,
and
(2)
with respect to a corporation
organized under the
laws of Guam, American
Samoa, or the Northern
Mariana Islands--
(A)
80 percent or more
of the gross income
of which for the 3-year
period ending at the
close of the taxable
year (or for such part
of such period as such
corporation or any
predecessor has been
in existence) was derived
from sources within
such a possession or
was effectively connected
with the conduct of
a trade or business
in such a possession,
and
(B)
50 percent or more
of the gross income
of which for such period
(or part) was derived
from the conduct of
an active trade or
business within such
a possession,
such
term does not include
an individual who is
a bona fide resident
of Guam, American Samoa,
or the Northern Mariana
Islands.
For
purposes of subparagraphs
(A) and (B) of paragraph
(2), the determination
as to whether income
was derived from sources
within a possession,
was effectively connected
with the conduct of
a trade or business
within a possession,
or derived from the
active conduct of a
trade or business within
a possession shall
be made under regulations
prescribed by the Secretary.
