Editorial Notes
References in Text
Section 1562, referred to in subsec. (b)(3), was repealed by Pub. L. 91–172, title IV, § 401(a)(2), Dec. 30, 1969, 83 Stat. 600.
The FSC Repeal and Extraterritorial Income Exclusion Act of 2000, referred to in subsec. (c)(5), is Pub. L. 106–519, Nov. 15, 2000, 114 Stat. 2423. For complete classification of this Act to the Code, see Short Title of 2000 Amendments note set out under section 1 of this title and Tables.
Amendments
2017—Subsec. (a)(4). Pub. L. 115–97, § 14301(c)(2), amended par. (4) generally. Prior to amendment, text read as follows: “For purposes of this subsection, the term ‘post-1986 undistributed earnings’ has the meaning given to such term by section 902(c)(1).”
Subsec. (a)(10). Pub. L. 115–97, § 14301(c)(3), which directed amendment of subsec. (a)(10)(C) by substituting “907 and 960” for “902, 907, and 960”, was executed by making the substitution in concluding provisions of subsec. (a)(10) to reflect the probable intent of Congress.
Subsec. (c)(1)(B). Pub. L. 115–97, § 13002(b), substituted “50 percent” for “70 percent” and “65 percent” for “80 percent”.
2015—Subsec. (a)(12). Pub. L. 114–113 added par. (12).
2007—Subsec. (c)(4)(C). Pub. L. 110–172, § 11(g)(3), added subpar. (C).
Subsec. (c)(5). Pub. L. 110–172, § 11(g)(4), added par. (5).
2004—Subsec. (a)(2). Pub. L. 108–357 struck out “foreign personal holding company or” after “(other than a”.
1989—Subsec. (a)(8). Pub. L. 101–239 made clarifying amendment to directory language of Pub. L. 100–647, § 1012(l)(2)(A), see 1988 Amendment note below.
1988—Subsec. (a)(8). Pub. L. 100–647, § 1012(l)(2)(A), as amended by Pub. L. 101–239, substituted “Disallowance of foreign tax credit” for “Coordination with section 902” in heading and amended text generally. Prior to amendment, text read as follows: “In the case of a dividend received by a corporation from a qualified 10-percent owned foreign corporation, no credit shall be allowed under section 901 for any taxes treated as paid under section 902 with respect to the U.S.-source portion of such dividend.”
Subsec. (a)(10), (11). Pub. L. 100–647, § 1012(l)(2)(B), (3), added pars. (10) and (11).
Subsec. (c). Pub. L. 100–647, § 1012(bb)(9)(A), amended subsec. (c) generally, revising and restating provisions of pars. (1) to (4).
Subsec. (d). Pub. L. 100–647, § 1006(e)(16), struck out subsec. (d) which read as follows: “Property distributions.—For purposes of this section, the amount of any distribution of property other than money shall be the amount determined by applying section 301(b)(1)(B).”
1987—Subsec. (c)(1)(B). Pub. L. 100–203 substituted “70 percent (80 percent in the case of dividends from a 20-percent owned corporation as defined in section 243(c)(2))” for “85 percent”.
1986—Subsec. (a). Pub. L. 99–514, § 1226(a), in amending subsec. (a) generally, substituted “Dividends from 10-percent owned foreign corporations” for “General rule” as heading, and in text substituted provisions set out in nine numbered paragraphs allowing for deduction for dividends received from certain foreign corporations qualifying as “10-percent owned foreign corporations” for former provisions which directed that, in the case of dividends received from a foreign corporation (other than a foreign personal holding company) which was subject to taxation under this chapter, if, for an uninterrupted period of not less than 36 months ending with the close of such foreign corporation’s taxable year in which such dividends were paid (or, if the corporation had not been in existence for 36 months at the close of such taxable year, for the period the foreign corporation had been in existence as of the close of such taxable year) such foreign corporation had been engaged in trade or business within the United States and if 50 percent or more of the gross income of such corporation from all sources for such period was effectively connected with the conduct of a trade or business within the United States, there was allowed as a deduction in the case of a corporation a percentage of dividends received.
Subsec. (c)(1). Pub. L. 99–514, § 1876(d)(1)(A), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “In the case of a domestic corporation, there shall be allowed as a deduction an amount equal to 100 percent of any dividend received by such corporation from another corporation which is distributed out of earnings and profits attributable to foreign trade income for a period during which such other corporation was a FSC. The deduction allowable under the preceding sentence with respect to any dividend shall be in lieu of any deduction allowable under subsection (a) or (b) with respect to such dividend.”
Subsec. (c)(3). Pub. L. 99–514, § 1876(j), added par. (3). Former par. (3) redesignated (4).
Pub. L. 99–514, § 1876(d)(1)(B), inserted “For purposes of this subsection, the term ‘qualified interest and carrying charges’ means any interest or carrying charges (as defined in section 927(d)(1)) derived from a transaction which results in foreign trade income.”
Subsec. (c)(4). Pub. L. 99–514, § 1876(j), redesignated former par. (3) as (4).
1984—Subsec. (c). Pub. L. 98–369 added subsec. (c), redesignated former subsec. (c) as (d), and substituted therein “this section” for “subsections (a) and (b)”.
1966—Subsec. (a). Pub. L. 89–809, § 104(d), (e)(2), substituted “and if 50 percent or more of the gross income of such corporation from all sources for such period is effectively connected with the conduct of a trade or business within the United States” for “and has derived 50 percent or more of its gross income from sources within the United States” in provisions preceding par. (1), “which is effectively connected with the conduct of a trade or business within the United States” for “from sources within the United States” in par. (1), “, which is effectively connected with the conduct of a trade or business within the United States,” for “from sources within the United States” in par. (2), and inserted provisions following par. (2).
Subsecs. (b), (c). Pub. L. 89–809, § 104(e)(1), (3), added subsec. (b), redesignated former subsec. (b) as (c), and substituted therein “subsections (a) and (b)” for “subsection (a)”.
1962—Subsec. (b). Pub. L. 87–834 designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Pub. L. 114–113, div. Q, title III, § 326(b), Dec. 18, 2015, 129 Stat. 3104, provided that:
“The amendment made by this section [amending this section] shall apply to dividends received from regulated investment companies and real estate investment trusts on or after the date of the enactment of this Act [Dec. 18, 2015].”
Effective Date of 2004 Amendment
Amendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004 Amendments note under section 1 of this title.
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1012(bb)(9)(B), Nov. 10, 1988, 102 Stat. 3537, provided that:
“The amendment made by subparagraph (A) [amending this section] shall apply as if included in the provision of the
Tax Reform Act of 1984 [
Pub. L. 98–369, div. A] to which it relates.”
Amendment by sections 1006(e)(16) and 1012(l)(2), (3) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendment
Pub. L. 99–514, title XII, § 1226(c)(1), Oct. 22, 1986, 100 Stat. 2560, provided that:
“The amendment made by subsection (a) [amending this section] shall apply to distributions out of earnings and profits for taxable years beginning after December 31, 1986.”
Amendment by section 1876(d)(1), (j) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date of 1984 Amendment
Pub. L. 98–369, div. A, title VIII, § 805(a), July 18, 1984, 98 Stat. 1000, as amended by Pub. L. 99–514, § 2, title XVIII, § 1876(i), (o), (p)(4), Oct. 22, 1986, 100 Stat. 2095, 2900–2902, provided that:
“(1) In general.—
Except as provided in this subsection, the amendments made by this title [enacting sections
921 to
927 of this title, amending this section and sections
246,
274,
275,
441,
901,
904,
906,
934,
936,
951,
956,
992,
993,
995,
996,
999,
1248,
6011,
6072,
6501,
6686, and
7651 of this title, and enacting provisions set out as notes under sections
921 and
991 of this title] shall apply to transactions after
December 31, 1984, in taxable years ending after such date.
“(2) Special rule for certain contracts.—To the extent provided in regulations prescribed by the Secretary of the Treasury or his delegate, any event or activity required to occur or required to be performed, before January 1, 1985, by section 924(c) or (d) or 925(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall be treated as meeting the requirements of such section if such event or activity is with respect to—
“(A)
any lease of more than 3 years duration which was entered into before January 1, 1985,
“(B)
any contract with respect to which the taxpayer uses the completed contract method of accounting which was entered into before January 1, 1985, or
“(C)
in the case of any contract other than a lease or contract described in subparagraph (A) or (B), any contract which was entered into before
January 1, 1985; except that this subparagraph shall only apply to the first 3 taxable years of the
FSC ending after
January 1, 1985, or such later taxable years as the Secretary of the Treasury or his delegate may prescribe.
“(3) Section 801(d)(10).—
The amendment made by section 801(d)(10) [amending
section 996 of this title] shall apply to distributions on or after
June 22, 1984.
“(4) Section 803.—
The amendments made by section 803 [amending
section 441 of this title] shall apply to taxable years beginning after
December 31, 1984.”
Construction of 2015 Amendment
Pub. L. 114–113, div. Q, title III, § 326(c), Dec. 18, 2015, 129 Stat. 3104, provided that:
“Nothing contained in this section [amending this section and enacting provisions set out as a note above] or the amendments made by this section shall be construed to create any inference with respect to the proper treatment under section 245 of the
Internal Revenue Code of 1986 of dividends received from regulated investment companies or real estate investment trusts before the date of the enactment of this Act [
Dec. 18, 2015].”
Dividends Received or Accrued During 1987
Pub. L. 100–647, title I, § 1006(b)(1), Nov. 10, 1988, 102 Stat. 3393, provided that:
“In the case of dividends received or accrued during 1987—
“(A)
subparagraph (B) of section 245(c)(1) of the 1986 Code shall be applied by substituting ‘80 percent’ for the percentage specified therein, and
“(B)
subparagraph (B) of section 861(a)(2) of the 1986 Code shall be applied by substituting ‘100⁄80ths’ for the fraction specified therein.”
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.
