Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
I.R.C. § 554(a) Constructive Ownership —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
For purposes of determining whether a corporation is a foreign personal holding company,
insofar as such determination is based on stock ownership under section 552(a)(2), section 553(a)(5), or section 553(a)(6)—
I.R.C. § 554(a)(1) Stock Not Owned By Individual —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
Stock owned, directly or indirectly, by or for a corporation, partnership, estate,
or trust shall be considered as being owned proportionately by its shareholders,
partners, or beneficiaries.
I.R.C. § 554(a)(2) Family And Partnership Ownership —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with
or within which such taxable years of foreign corporations end.
An individual shall be considered as owning the stock owned, directly or indirectly,
by or for his family or by or for his partner. For purposes of this paragraph, the
family of an individual includes only his brothers and sisters
(whether by the whole or half blood), spouse, ancestors, and lineal descendants.
I.R.C. § 554(a)(3) Options —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
If any person has an option to acquire stock, such stock shall be considered as owned
by such person. For purposes of this paragraph, an option to acquire such an option,
and each one of a series of such options, shall be considered as an option to acquire
such stock.
I.R.C. § 554(a)(4) Application Of Family-Partnership And Option Rules —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
Paragraphs (2) and (3) shall be applied—
I.R.C. § 554(a)(4)(A) —
for purposes of the stock ownership requirement provided in section 552(a)(2),
if, but only if, the effect is to make the corporation a foreign personal holding
company;
I.R.C. § 554(a)(4)(B) —
for purposes of section 553(a)(5) (relating to personal service contracts) or of section 553(a)(6) (relating to the use of property by shareholders), if, but only if, the effect is
to make the amounts therein referred to includible under such paragraph as foreign
personal holding company income.
I.R.C. § 554(a)(5) Constructive Ownership As Actual Ownership —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with
or within which such taxable years of foreign corporations end.
Stock constructively owned by a person by reason of the application of paragraph
(1) or (3) shall, for purposes of applying paragraph (1) or (2), be treated as actually
owned by such person; but stock constructively owned by an individual by reason of
the application of paragraph (2) shall not be treated as owned by him for purposes
of again applying such paragraph in order to make another the constructive owner
of such stock.
I.R.C. § 554(a)(6) Option Rule In Lieu Of Family And Partnership Rule —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with
or within which such taxable years of foreign corporations end.
If stock may be considered as owned by an individual under either paragraph (2) or
(3) it shall be considered as owned by him under paragraph (3).
I.R.C. § 554(b) Convertible Securities —
Outstanding securities convertible into stock (whether or not convertible during
the taxable year) shall be considered as outstanding stock—
I.R.C. § 554(b)(1) —
for purposes of the stock ownership requirement provided in section 552(a)(2),
but only if the effect of the inclusion of all such securities is to make the corporation
a foreign personal holding company;
I.R.C. § 554(b)(2) —
for purposes of section 553(a)(5) (relating to personal service contracts), but only if the effect of the inclusion
of all such securities is to make the amounts therein referred to includible under
such paragraph as foreign personal holding company income;
and
I.R.C. § 554(b)(3) —
for purposes of section 553(a)(6) (relating to the use of property by shareholders), but only if the effect of the
inclusion of all such securities is to make the amounts therein referred to includible
under such paragraph as foreign personal holding company income.
The requirement in paragraphs (1), (2), and (3) that all convertible securities must
be included if any are to be included shall be subject to the exception that, where
some of the outstanding securities are convertible only after a later date than in
the case of others, the class having the earlier conversion date may be included
although the others are not included, but no convertible securities shall be included
unless all outstanding securities having a prior conversion date are also included.
I.R.C. § 554(c) Special Rules For Application Of Subsection (a)(2) —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554, effective for taxable years of foreign corporations beginning
after December 31, 2004, and to taxable years of United States shareholders with or
within which such taxable years of foreign corporations end.
For purposes of the stock ownership requirement provided in section 552(a)(2)—
I.R.C. § 554(c)(1) —
stock owned by a nonresident alien individual (other than a foreign trust or foreign
estate) shall not be considered by reason of so much of subsection (a)(2) as relates
to attribution through family membership as owned by a citizen or by a resident alien
individual who is not the spouse of the nonresident individual and who does not otherwise
own stock in such corporation
(determined after the application of subsection (a), other than attribution through
family membership), and
I.R.C. § 554(c)(2) —
stock of a corporation owned by any foreign person shall not be considered by reason
of so much of subsection
(a)(2) as relates to attribution through partners as owned by a citizen or resident
of the United States who does not otherwise own stock in such corporation (determined
after application of subsection (a)
and paragraph (1), other than attribution through partners).
(Aug. 16, 1954, ch. 736, 68A Stat. 196; Feb. 26, 1964,
Pub. L. 88-272, title II, 225(e), 78 Stat. 86; July 18, 1984, Pub. L. 98-369, div. A, title I, 132(a), 98 Stat. 665; repealed by Pub. L. 108-357, title IV, Sec. 413(a)(1), Oct. 22, 2004, 118 Stat. 1418.)
BACKGROUND NOTES
AMENDMENTS
2004 - Sec. 554. Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 554.
1984--Subsec. (c). Pub. L. 98-369 added subsec. (c).
1964--Pub. L. 88-272 amended section generally by designating existing provisions as subsec. (a), and
substituting pars. (1) to (6) therein and subsec. (b), for provisions which incorporated
by reference substantially the same provisions as in such pars. (1) to (6) and subsec.
(b).
EFFECTIVE DATE OF REPEAL
Repeal by Pub. L. 108-357, Sec. 413(a)(1), effective for taxable years of foreign corporations beginning after December 31,
2004, and to taxable years of United States shareholders with or within which such
taxable years of foreign corporations end.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-369 applicable to taxable years of foreign corporations beginning after Dec. 31, 1983,
see section 132(d)(1) of Pub. L. 98-369, set out as a note under section 551 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 225(l)(1)
of Pub. L. 88-272, set out as a note under section 316 of this title.
