26 U.S.C. § 951A
Net CFC tested income included in gross income of United States shareholders
# (a) In general
Each person who is a United States shareholder of any controlled foreign corporation for any taxable year of such United States shareholder shall include in gross income such shareholder’s net CFC tested income for such taxable year.
# (b) Net CFC tested income
For purposes of this section— (1) In general The term “net CFC tested income” means, with respect to any United States shareholder for any taxable year of such United States shareholder, the excess (if any) of— (A) the aggregate of such shareholder’s pro rata share of the tested income of each controlled foreign corporation with respect to which such shareholder is a United States shareholder for such taxable year of such United States shareholder, over (B) the aggregate of such shareholder’s pro rata share of the tested loss of each controlled foreign corporation with respect to which such shareholder is a United States shareholder for such taxable year of such United States shareholder. (2) Tested income; tested loss For purposes of this section— (A) Tested income The term “tested income” means, with respect to any controlled foreign corporation for any taxable year of such controlled foreign corporation, the excess (if any) of— (i) the gross income of such corporation determined without regard to— (I) any item of income described in section 952(b), (II) any gross income taken into account in determining the subpart F income of such corporation, (III) any gross income excluded from the foreign base company income (as defined in section 954) and the insurance income (as defined in section 953) of such corporation by reason of section 954(b)(4), (IV) any dividend received from a related person (as defined in section 954(d)(3)), and (V) any foreign oil and gas extraction income (as defined in section 907(c)(1)) of such corporation, over (ii) the deductions (including taxes) properly allocable to such gross income under rules similar to the rules of section 954(b)(5) (or to which such deductions would be allocable if there were such gross income). (B) Tested loss (i) In general The term “tested loss” means, with respect to any controlled foreign corporation for any taxable year of such controlled foreign corporation, the excess (if any) of the amount described in subparagraph (A)(ii) over the amount described in subparagraph (A)(i). (ii) Coordination with subpart F to deny double benefit of losses Section 952(c)(1)(A) shall be applied by increasing the earnings and profits of the controlled foreign corporation by the tested loss of such corporation.
# (c) Determination of pro rata share, etc.
For purposes of this section— (1) In general The pro rata shares referred to in subsections (b)(1)(A) and (b)(1)(B), respectively, shall be determined under the rules of section 951(a)(2) in the same manner as such section applies to subpart F income and shall be taken into account in the taxable year of the United States shareholder determined under section 951(a)(3). (2) Treatment as United States shareholder A person shall be treated as a United States shareholder of a controlled foreign corporation for any taxable year of such person only if such person owns (within the meaning of section 958(a)) stock in such foreign corporation on any day in such taxable year. (3) Treatment as controlled foreign corporation A foreign corporation shall be treated as a controlled foreign corporation for any taxable year if such foreign corporation is a controlled foreign corporation at any time during such taxable year.
# (d) Treatment as subpart F income for certain purposes
(1) In general (A) Application Except as provided in subparagraph (B), any net CFC tested income included in gross income under subsection (a) shall be treated in the same manner as an amount included under section 951(a)(1)(A) for purposes of applying sections 168(h)(2)(B), 535(b)(10), 851(b), 904(h), 959, 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), 1248(d)(1), 6501(e)(1)(C), 6654(d)(2)(D), and 6655(e)(4). (B) Exception The Secretary shall provide rules for the application of subparagraph (A) to other provisions of this title in any case in which the determination of subpart F income is required to be made at the level of the controlled foreign corporation. (2) Allocation of net CFC tested income to controlled foreign corporations For purposes of the sections referred to in paragraph (1), with respect to any controlled foreign corporation any pro rata amount from which is taken into account in determining the net CFC tested income included in gross income of a United States shareholder under subsection (a), the portion of such net CFC tested income which is treated as being with respect to such controlled foreign corporation is— (A) in the case of a controlled foreign corporation with no tested income, zero, and (B) in the case of a controlled foreign corporation with tested income, the portion of such net CFC tested income which bears the same ratio to such net CFC tested income as— (i) such United States shareholder’s pro rata amount of the tested income of such controlled foreign corporation, bears to (ii) the aggregate amount described in subsection (b)(1)(A) with respect to such United States shareholder.
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Cited by 48
- 26 CFR § 1.1502-12 — Separate taxable income.
- 26 CFR § 1.1502-51 — Consolidated section 951A.
- 26 CFR § 1.163(j)-1 — Definitions.
- 26 CFR § 1.163(j)-7 — Application of the section 163(j) limitation to foreign corporations and United States shareholders.
- 26 CFR § 1.245A(d)-1 — Disallowance of foreign tax credit or deduction.
- 26 CFR § 1.245A(e)-1 — Special rules for hybrid dividends.
- 26 CFR § 1.245A-10 — Examples.
- 26 CFR § 1.245A-5 — Limitation of section 245A deduction and section 954(c)(6) exception.
- 26 CFR § 1.245A-9 — Other rules and definitions.
- 26 CFR § 1.250(b)-2 — Qualified business asset investment (QBAI).
- 26 CFR § 1.267A-3 — Income inclusions and amounts not treated as disqualified hybrid amounts.
- 26 CFR § 1.267A-4 — Disqualified imported mismatch amounts.
Show 36 more
- 26 CFR § 1.267A-6 — Examples.
- 26 CFR § 1.367(a)-3 — Treatment of transfers of stock or securities to foreign corporations.
- 26 CFR § 1.367(b)-10 — Acquisition of parent stock or securities for property in triangular reorganizations.
- 26 CFR § 1.512(b)-1 — Modifications.
- 26 CFR § 1.78-1 — Gross up for deemed paid foreign tax credit.
- 26 CFR § 1.861-12 — Characterization rules and adjustments for certain assets.
- 26 CFR § 1.861-13 — Special rules for characterization of controlled foreign corporation stock.
- 26 CFR § 1.861-17 — Allocation and apportionment of research and experimental expenditures.
- 26 CFR § 1.861-20 — Allocation and apportionment of foreign income taxes.
- 26 CFR § 1.861-8 — Computation of taxable income from sources within the United States and from other sources and activities.
- 26 CFR § 1.861-8T — Computation of taxable income from sources within the United States and from other sources and activities (temporary).
- 26 CFR § 1.904(b)-3 — Disregard of certain dividends and deductions under section 904(b)(4).
- 26 CFR § 1.904(f)-12 — Transition rules.
- 26 CFR § 1.904-2 — Carryback and carryover of unused foreign tax.
- 26 CFR § 1.904-4 — Separate application of section 904 with respect to certain categories of income.
- 26 CFR § 1.904-5 — Look-through rules as applied to controlled foreign corporations and other entities.
- 26 CFR § 1.904-6 — Allocation and apportionment of foreign income taxes.
- 26 CFR § 1.905-3 — Adjustments to U.S. tax liability and to current earnings and profits as a result of a foreign tax redetermination.
- 26 CFR § 1.951-1 — Amounts included in gross income of United States shareholders.
- 26 CFR § 1.951A-1 — General provisions.
- 26 CFR § 1.951A-2 — Tested income and tested loss.
- 26 CFR § 1.951A-3 — Qualified business asset investment.
- 26 CFR § 1.951A-4 — Tested interest expense and tested interest income.
- 26 CFR § 1.951A-5 — Treatment of GILTI inclusion amounts.
- 26 CFR § 1.958-1 — Direct and indirect ownership of stock.
- 26 CFR § 1.960-1 — Overview, definitions, and computational rules for determining foreign income taxes deemed paid under section 960(a), (b), and (d).
- 26 CFR § 1.960-2 — Foreign income taxes deemed paid under sections 960(a) and (d).
- 26 CFR § 1.960-3 — Foreign income taxes deemed paid under section 960(b).
- 26 CFR § 1.960-4 — Additional foreign tax credit in year of receipt of previously taxed earnings and profits.
- 26 CFR § 1.960-6 — Overpayments resulting from increase in limitation for taxable year of exclusion.
- 26 CFR § 1.962-1 — Limitation of tax for individuals on amounts included in gross income under section 951(a).
- 26 CFR § 1.987-11 — Suspended section 987 loss relating to certain elections; loss-to-the-extent-of-gain rule.
- 26 U.S.C. § 250 — Foreign-derived deduction eligible income and net CFC tested income
- 26 U.S.C. § 904 — Limitation on credit
- 26 U.S.C. § 951B — Amounts included in gross income of foreign controlled United States shareholders
- 26 U.S.C. § 960 — Deemed paid credit for subpart F inclusions
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