For purposes of this subpart (other than section
960(a)(1)), stock owned means—
(A)stock owned directly, and
(B)stock owned with the application of paragraph (2).
(2) Stock ownership through foreign entities
For purposes of subparagraph (B) of paragraph (1), stock owned, directly or indirectly, by or for a foreign corporation, foreign partnership, or foreign trust or foreign estate (within the meaning of section
7701(a)(31)) shall be considered as being owned proportionately by its shareholders, partners, or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.
(3) Special rule for mutual insurance companies
For purposes of applying paragraph (1) in the case of a foreign mutual insurance company, the term “stock” shall include any certificate entitling the holder to voting power in the corporation.
(b) Constructive ownership
For purposes of sections
318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder within the meaning of section
951(b), to treat a person as a related person within the meaning of section
954(d)(3), to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section
956(c)(2), or to treat a foreign corporation as a controlled foreign corporation under section
957, except that—
(1)In applying paragraph (1)(A) of section
318(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign estate) shall not be considered as owned by a citizen or by a resident alien individual.
(2)In applying subparagraphs (A), (B), and (C) of section
318(a)(2), if a partnership, estate, trust, or corporation owns, directly or indirectly, more than 50 percent of the total combined voting power of all classes of stock entitled to vote of a corporation, it shall be considered as owning all the stock entitled to vote.
(3)In applying subparagraph (C) of section
318(a)(2), the phrase “10 percent” shall be substituted for the phrase “50 percent” used in subparagraph (C).
(4)Subparagraph (A), (B), and (C) of section
318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.
Paragraphs (1) and (4) shall not apply for purposes of section
956(c)(2) to treat stock of a domestic corporation as not owned by a United States shareholder.
Subsec. (b). Pub. L. 104–188, § 1703(i)(4), substituted “956(c)(2)” for “956(b)(2)” wherever appearing in introductory and closing provisions.
1976—Subsec. (b). Pub. L. 94–455inserted “956(b)(2)” after “purposes of sections
954(d)(3),”, “to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section
956(b)(2)” after “meaning of section
954(d)(3)” and “Paragraphs (1) and (4) shall not apply for purposes of section
956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder” following subpar. (4).
1964—Subsec. (b). Pub. L. 88–554redesignated pars. (4) and (5) as (3) and (4), respectively, struck out former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for purposes of applying first sentence of subpars. (A) and (B), and subpar. (C)(i) of section
318(a)(2) of this title, and made amendments throughout subsec. (b) to conform to changes made in section
318 of this title by Pub. L. 88–554.
Effective Date of 1996 Amendment
Amendment by section 1703(i)(4) ofPub. L. 104–188effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) ofPub. L. 104–188, set out as a note under section
39 of this title.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455applicable to taxable years of foreign corporations beginning after Dec. 31, 1975, and to taxable years of United States shareholders within which or with which such taxable years of such corporations end, see section 1021(c) ofPub. L. 94–455, set out as a note under section
956 of this title.
Effective Date of 1964 Amendment
Amendment by Pub. L. 88–554effective Aug. 31, 1964, except that for purposes of sections
304 of this title, such amendments shall not apply to distributions in payment for stock acquisitions or redemptions, if such acquisitions or redemptions occurred before Aug. 31, 1964, see section 4(c) ofPub. L. 88–554, set out as a note under section
318 of this title.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.
Description of Change
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