26 U.S.C. § 957
§ 957. Controlled foreign corporations; United States persons
No plain-English explainer yet. Below is the official text. Explainers are being added section by section.
History
Added in 1962 by the Public Law 87-834. Last changed March 23, 2018 by the Consolidated Appropriations Act, 2018.
Every change, newest first (6)
- March 23, 2018Consolidated Appropriations Act, 2018
- December 22, 2017Tax Cuts and Jobs Act (2017)
- October 22, 2004American Jobs Creation Act of 2004
- October 22, 1986Tax Reform Act of 1986
- October 4, 1976Tax Reform Act of 1976
- October 16, 1962Public Law 87-834 · added this section
The law as written
Current through Public Law 119-102. Amendment notes omitted.
For purposes of this title, the term “controlled foreign corporation” means any foreign corporation if more than 50 percent of—
the total combined voting power of all classes of stock of such corporation entitled to vote, or
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.
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 not described in section 953(e)(2) exceeds 75 percent of the gross amount of all premiums or other consideration in respect of all risks.
For purposes of this subpart, the term “United States person” has the meaning assigned to it by section 7701(a)(30) except that—
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
with respect to a corporation organized under the laws of Guam, American Samoa, or the Northern Mariana Islands—
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
50 percent or more of the gross income of which for such period (or part) was derived from the active conduct of a 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 the active conduct of a trade or business within a possession shall be made under regulations prescribed by the Secretary.