26Title 26The US tax code, read & explained

26 U.S.C. § 951

§ 951. Amounts included in gross income of United States shareholders

544 words · amended 12 times · cited by 40 other sections

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No plain-English explainer yet. Below is the official text. Explainers are being added section by section.

History

Changed by the 2025 tax law

Added in 1962 by the Public Law 87-834. Last changed July 4, 2025 by the One Big Beautiful Bill Act (2025).

Every change, newest first (13)
  1. July 4, 2025One Big Beautiful Bill Act (2025)
  2. December 22, 2017Tax Cuts and Jobs Act (2017)
  3. December 29, 2007Public Law 110-172
  4. October 22, 2004American Jobs Creation Act of 2004
  5. August 5, 1997Taxpayer Relief Act of 1997
  6. August 20, 1996Small Business Job Protection Act of 1996
  7. August 10, 1993Omnibus Budget Reconciliation Act of 1993
  8. November 10, 1988Technical and Miscellaneous Revenue Act of 1988
  9. October 22, 1986Tax Reform Act of 1986
  10. July 18, 1984Deficit Reduction Act of 1984
  11. October 4, 1976Tax Reform Act of 1976
  12. March 29, 1975Public Law 94-12
  13. October 16, 1962Public Law 87-834 · added this section

The law as written

Current through Public Law 119-102. Amendment notes omitted.

Structure

  1. (a) Amounts included
  2. (b) United States shareholder defined
  3. (c) Coordination with passive foreign investment company provisions
(a) Amounts included
(1) In general

If a foreign corporation is a controlled foreign corporation at any time during a taxable year of the foreign corporation (in this subsection referred to as the “CFC year”)—

(A)

each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder’s pro rata share (determined under paragraph (2)) of the corporation’s subpart F income for the CFC year, and

(B)

each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on the last day, in the CFC year, on which such corporation is a controlled foreign corporation shall include in gross income the amount determined under section 956 with respect to such shareholder for the CFC year (but only to the extent not excluded from gross income under section 959(a)(2)).

(2) Pro rata share of subpart F income

A United States shareholder’s pro rata share of a controlled foreign corporation’s subpart F income for a CFC year shall be the portion of such income which is attributable to—

(A)

the stock of such corporation owned (within the meaning of section 958(a)) by such shareholder, and

(B)

any period of the CFC year during which—

(i)

such shareholder owned (within the meaning of section 958(a)) such stock,

(ii)

such shareholder was a United States shareholder of such corporation, and

(iii)

such corporation was a controlled foreign corporation.

(3) Taxable year of inclusion

Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder’s taxable year which includes the last day on which the shareholder owns (within the meaning of section 958(a)) stock in the controlled foreign corporation during such CFC year.

(4) Regulatory authority

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance allowing taxpayers to elect, or requiring taxpayers, to close the taxable year of a controlled foreign corporation upon a direct or indirect disposition of stock of such corporation.

(b) United States shareholder defined

For purposes of this title, 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, or 10 percent or more of the total value of shares of all classes of stock of such foreign corporation.

(c) 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).