I.R.C. § 1249(a) General Rule —
Gain from the sale or exchange of a patent, an invention, model, or design (whether
or not patented), a copyright, a secret formula or process, or any other similar
property right to any foreign corporation by any United States person (as defined
in section 7701(a)(30)) which controls such foreign corporation shall, if such gain would (but for the
provisions of this subsection) be gain from the sale or exchange of a capital asset
or of property described in section 1231, be considered as ordinary income.
I.R.C. § 1249(b) Control —
For purposes of subsection (a), control means, with respect to any foreign corporation,
the ownership, directly or indirectly, of stock possessing more than 50 percent of
the total combined voting power of all classes of stock entitled to vote. For purposes
of this subsection, the rules for determining ownership of stock prescribed by section
958 shall apply.
(Added by Pub. L. 87-834, 16(a), Oct. 16, 1962, 76 Stat. 1045, and amended by Pub. L. 89-809, title I, 104(m)(3), Nov. 13, 1966, 80 Stat. 1563; Pub. L. 94-455, title XIX, 1901(b)(3)(K), Oct. 4, 1976, 90 Stat. 1793; Pub. L. 113-295, Div. A, title II, Sec. 221(a)(84), Dec. 19, 2014, 128 Stat. 4010.)
BACKGROUND NOTES
AMENDMENTS
2014--Subsec. (a). Pub. L. 113-295, Div. A, Sec. 221(a)(84), amended subsec. (a) by striking “after December 31, 1962,”.
1976--Subsec. (a). Pub. L. 94-455 substituted “ordinary income” for “gain from the sale or exchange of property which
is neither a capital asset nor property described in section 1231”.
1966--Subsec. (a). Pub. L. 89-809 substituted “Gain"
for “Except as provided in subsection (c), gain”.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. A, Sec. 221(a)(84), effective on the date of the enactment of this Act [Enacted:
Dec. 19, 2014].
Section 221(b)(2) of Pub. L. 113-295, Div. A, provided the following Savings Provision:
“(2)
SAVINGS PROVISION.—If—
“(A)
any provision amended or repealed by the amendments made by this section applied to—
“(i)
any transaction occurring before the date of the enactment of this Act [Enacted: Dec.
19, 2014],
“(ii)
any property acquired before such date of enactment, or
“(iii)
any item of income, loss, deduction, or credit taken into account before such date
of enactment, and
“(B)
the treatment of such transaction, property, or item under such provision would (without
regard to the amendments or repeals made by this section)
affect the liability for tax for periods ending after date of enactment, nothing in
the amendments or repeals made by this section shall be construed to affect the treatment
of such transaction, property, or item for purposes of determining liability for tax
for periods ending after such date of enactment.”
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d)
of Pub. L. 94-455, set out as a note under section 2 of this title.
EFFECTIVE DATE OF 1966 AMENDMENT
Amendment by Pub. L. 89-809 applicable with respect to taxable years beginning after Dec. 31, 1966, see section
104(n) of Pub. L. 89-809, set out as a note under section 11 of this title.
EFFECTIVE DATE
Section 16(c) of Pub. L. 87-834 provided that: “The amendments made by this section [enacting this section] shall
apply to taxable years beginning after December 31, 1962.”
