I.R.C. § 245A(a) In General —
In the case of any dividend received from a specified
10-percent owned foreign corporation by a domestic corporation which
is a United States shareholder with respect to such foreign corporation,
there shall be allowed as a deduction an amount equal to the foreign-source
portion of such dividend.
I.R.C. § 245A(b) Specified 10-Percent Owned Foreign Corporation —
For purposes of this section—
I.R.C. § 245A(b)(1) In General —
The term “specified 10-percent owned foreign corporation”
means any foreign corporation with respect to which any domestic corporation
is a United States shareholder with respect to such corporation.
I.R.C. § 245A(b)(2) Exclusion Of Passive Foreign Investment Companies —
Such term shall not include any corporation which is
a passive foreign investment company (as defined in section 1297) with respect to the shareholder
and which is not a controlled foreign corporation.
I.R.C. § 245A(c) Foreign-Source Portion —
For purposes of this section—
I.R.C. § 245A(c)(1) In General —
The foreign-source portion of any dividend from a specified
10-percent owned foreign corporation is an amount which bears the
same ratio to such dividend as—
I.R.C. § 245A(c)(1)(A) —
the undistributed foreign earnings of
the specified 10-percent owned foreign corporation, bears to
I.R.C. § 245A(c)(1)(B) —
the total undistributed earnings of such
foreign corporation.
I.R.C. § 245A(c)(2) Undistributed Earnings —
The term “undistributed earnings” means the
amount of the earnings and profits of the specified 10-percent owned
foreign corporation (computed in accordance with sections 964(a )and 986)—
I.R.C. § 245A(c)(2)(A) —
as of the close of the taxable year of
the specified 10-percent owned foreign corporation in which the dividend
is distributed, and
I.R.C. § 245A(c)(2)(B) —
without diminution by reason of dividends
distributed during such taxable year.
I.R.C. § 245A(c)(3) Undistributed Foreign Earnings —
The term “undistributed foreign earnings”
means the portion of the undistributed earnings which is attributable
to neither—
I.R.C. § 245A(c)(3)(A) —
income described in subparagraph (A)
of section 245(a)(5),
nor
I.R.C. § 245A(c)(3)(B) —
dividends described in subparagraph (B)
of such section (determined without regard to section 245(a)(12)).
I.R.C. § 245A(d) Disallowance Of Foreign Tax Credit, Etc.
I.R.C. § 245A(d)(1) In General —
No credit shall be allowed under section 901 for any taxes paid or accrued
(or treated as paid or accrued) with respect to any dividend for which
a deduction is allowed under this section.
I.R.C. § 245A(d)(2) Denial Of Deduction —
No deduction shall be allowed under this chapter for
any tax for which credit is not allowable under section 901 by reason of paragraph (1)
(determined by treating the taxpayer as having elected the benefits
of subpart A of part III of subchapter N).
I.R.C. § 245A(e) Special Rules For Hybrid Dividends
I.R.C. § 245A(e)(1) In General —
Subsection (a) shall not apply to any dividend received
by a United States shareholder from a controlled foreign corporation
if the dividend is a hybrid dividend.
I.R.C. § 245A(e)(2) Hybrid Dividends Of Tiered Corporations —
If a controlled foreign corporation with respect to which
a domestic corporation is a United States shareholder receives a hybrid
dividend from any other controlled foreign corporation with respect
to which such domestic corporation is also a United States shareholder,
then, notwithstanding any other provision of this title—
I.R.C. § 245A(e)(2)(A) —
the hybrid dividend shall be treated
for purposes of section 951(a)(1)(A) as
subpart F income of the receiving controlled foreign corporation for
the taxable year of the controlled foreign corporation in which the
dividend was received, and
I.R.C. § 245A(e)(2)(B) —
the United States shareholder shall include
in gross income an amount equal to the shareholder's pro rata
share (determined in the same manner as under section 951(a)(2)) of the subpart
F income described in subparagraph (A).
I.R.C. § 245A(e)(3) Denial Of Foreign Tax Credit, Etc. —
The rules of subsection (d) shall apply to any hybrid
dividend received by, or any amount included under paragraph (2) in
the gross income of, a United States shareholder.
I.R.C. § 245A(e)(4) Hybrid Dividend —
The term “hybrid dividend” means an amount
received from a controlled foreign corporation—
I.R.C. § 245A(e)(4)(A) —
for which a deduction would be allowed
under subsection (a) but for this subsection, and
I.R.C. § 245A(e)(4)(B) —
for which the controlled foreign corporation
received a deduction (or other tax benefit) with respect to any income,
war profits, or excess profits taxes imposed by any foreign country
or possession of the United States.
I.R.C. § 245A(f) Special Rule For Purging Distributions Of Passive Foreign Investment
Companies —
Any amount which is treated as a dividend under section 1291(d)(2)(B) shall
not be treated as a dividend for purposes of this section.
I.R.C. § 245A(g) Regulations —
The Secretary shall prescribe such regulations or other
guidance as may be necessary or appropriate to carry out the provisions
of this section, including regulations for the treatment of United
States shareholders owning stock of a specified 10 percent owned foreign
corporation through a partnership.
(Added by Pub. L. 115-97,
title I, Sec. 14101(a), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
EFFECTIVE DATE
Effective for distributions
made after December 31, 2017.
