Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, effective for taxable years of foreign corporations beginning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. § 556(a) Definition —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, effective for taxable years of foreign corporations beginning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 this part, the term
“undistributed foreign personal holding company income” means the taxable income
of a foreign personal holding company adjusted in the manner provided in subsection
(b), minus the dividends paid deduction
(as defined in section 561).
I.R.C. § 556(b) Adjustments To Taxable Income —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, effective for taxable years of foreign corporations beginning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 the purposes of subsection (a), the taxable income shall be adjusted as follows:
I.R.C. § 556(b)(1) Taxes —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, effective for taxable years of foreign corporations beginning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.
There shall be allowed as a deduction Federal income and excess profits taxes and
income, war profits, and excess-profits taxes of foreign countries and possessions
of the United States (to the extent not allowable as a deduction under section 275(a)(4)), accrued during the taxable year, but not including the accumulated earnings tax
imposed by section 531, the personal holding company tax imposed by section 541, or the taxes imposed by corresponding sections of a prior income tax law.
I.R.C. § 556(b)(2) Charitable Contributions —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, effective for taxable years of foreign corporations beginning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.
The deduction for charitable contributions provided under section 170 shall be allowed, but in computing such deduction the limitations in section 170(b)(1)(A), (B), and
(D) shall apply, and section 170(b)(2) and
(d)(1) shall not apply. For purposes of this paragraph, the term
“contribution base” when used in section 170(b)(1) means the taxable
income computed with the adjustments (other than the 10-percent
limitation) provided in section 170(b)(2) and
(d)(1) and without the deduction of the amounts disallowed under paragraphs (5) and
(6) of this subsection or the inclusion in gross income of the amounts includible
therein as dividends by reason of the application of the provisions of section 555(b) (relating to the inclusion in gross income of a foreign personal holding company
of its distributive share of the undistributed foreign personal holding company income
of another company in which it is a shareholder).
I.R.C. § 556(b)(3) Special Deductions Disallowed —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, 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.
The special deductions for corporations provided in part VIII (except section 248)
of subchapter B (section 241 and following, relating to the deduction for dividends received by corporations,
etc.) shall not be allowed.
I.R.C. § 556(b)(4) Net Operating Loss —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, 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.
The net operating loss deduction provided in section 172
shall not be allowed, but there shall be allowed as a deduction the amount of the
net operating loss (as defined in section 172(c)) for the preceding taxable year computed without the deductions provided in part
VIII (except
section 248) of subchapter B.
I.R.C. § 556(b)(5) Expenses And Depreciation Applicable To Property Of The Taxpayer —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, 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.
The aggregate of the deductions allowed under section 162 (relating to trade or business expenses) and section 167 (relating to depreciation)
which are allocable to the operation and maintenance of property owned or operated
by the company, shall be allowed only in an amount equal to the rent or other compensation
received for the use of, or
the right to use, the property, unless it is established (under
regulations prescribed by the Secretary) to the satisfaction of the
Secretary—
I.R.C. § 556(b)(5)(A) —
that the rent or other compensation received was the highest obtainable, or, if
none was received, that none was obtainable;
I.R.C. § 556(b)(5)(B) —
that the property was held in the course of a business carried on bona fide for
profit; and
I.R.C. § 556(b)(5)(C) —
either that there was reasonable expectation that the operation of the property
would result in a profit, or that the property was necessary to the conduct of the
business.
I.R.C. § 556(b)(6) Taxes And Contributions To Pension Trusts —
Editor's Note:
Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556, 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.
The deductions provided in section 164(e) (relating to taxes of a shareholder paid by the corporation) and in section 404 (relating to pension, etc., trusts) shall not be allowed.
(Aug. 16, 1954, ch. 736, 68A Stat. 196; Sept. 2, 1958,
Pub. L. 85-866, title I, Sec. 33(a), (b)(1), (c)(1), 72 Stat. 1632; Feb. 2, 1962, Pub. L. 87-403, Sec. 3(e), 76 Stat. 7; Feb. 26, 1964, Pub. L. 88-272, title II, Sec. 207(b)(6), 209(c)(2), 78 Stat. 42, 46; Dec. 30, 1969, Pub. L. 91-172, title II, Sec. 201(a)(2)(B), 83 Stat. 558; Oct. 4, 1976, Pub. L. 94-455, title XIX, Sec. 1901(a)(80), (b)(32)(G), 1906(b)(13)(A), 90 Stat. 1778, 1800, 1834;
Jan. 12, 1983, Pub. L. 97-448, title I, Sec. 102(m)(2), 96 Stat. 2374; Nov. 5, 1990, Pub. L. 101-508, title XI, Sec. 11802(d)(1), 104 Stat. 1388-529; Repealed by Pub. L. 108-357, title IV, Sec. 413(a)(1), Oct. 22, 2004, 118 Stat. 1418.)
BACKGROUND NOTES
AMENDMENTS
2004 - Sec. 556. Pub. L. 108-357, Sec. 413(a)(1), repealed Sec. 556.
1990 - Subsec. (b)(1). Pub. L. 101-508 struck out at end ‘A taxpayer which, for each taxable year in which it was subject
to the provisions of supplement P of the Internal Revenue Code of 1939, deducted Federal
income and excess profits taxes when paid for the purpose of computing undistributed
supplement P net income under such code, shall deduct taxes under this paragraph when
paid, unless the corporation elects, under regulations prescribed by the Secretary,
after the date of enactment of this title to deduct the taxes described in this paragraph
when accrued. Such election shall be irrevocable and shall apply to the taxable year
for which the election is made and to all subsequent taxable years.’
1983 - Subsec. (b)(2). Pub. L. 97-448 substituted ‘10-percent’
for ‘5-percent’.
1976 - Subsec. (b)(1). Pub. L. 94-455, Sec. 1901(a)(80), 1906(b)(13)(A), struck out ‘(other than the excess profits tax imposed by subchapter
E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)' after ‘deduction Federal
income and excess profits taxes’ and ‘or his delegate’ after ‘Secretary’.
Subsec. (b)(5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out ‘or his delegate’ after ‘Secretary’ in two places.
Subsec. (b)(7), (8). Pub. L. 94-455, Sec. 1901(b)(32)(G), struck out par. (7) relating to disallowance of deduction as applied to taxes of
a shareholder paid by the corporation and contributions to pension funds, and struck
out par. (8) relating to special adjustment on disposition of antitrust stock received
as a dividend.
1969 - Subsec. (b)(2). Pub. L. 91-172 substituted ‘section 170(b)(1)(A),
(B), and (D)’ and ‘section 170(b)(2) and (d)(1)’ for ‘section 170(b)(1)(A)
and (B)’ and ‘section 170(b)(2) and (5)’, respectively, in provisions of first sentence
setting out the sections appropriate to the computation of the deduction, and in provisions
of second sentence describing applicability of terms for purposes of this paragraph,
substituted
‘contribution base’ and ‘section 170(b)(2) and (d)(1)’ for ‘adjusted gross income’
and ‘the first sentence of section 170(b)(2) and (5)’, respectively.
1964 - Subsec. (b)(1), (2). Pub. L. 88-272 substituted ‘section 275(a)(4)’
for ‘section 164(b)(6)’ in par. (1), and inserted the reference to section 170(b)(5)
in par. (2).
1962 - Subsec. (b)(7), (8). Pub. L. 87-403 added pars. (7) and (8).
1958 - Subsec. (b)(2). Pub. L. 85-866, Sec. 33(a), substituted in first sentence ‘but in computing such deduction the limitations in
section 170(b)(1)(A) and (B) shall apply, and section 170(b)(2)
shall not apply’ for ‘but with the limitation in section 170(b)(1)(A)
and (B) (in lieu of the limitation in section 170(b)(2))’ and in second sentence ‘the
taxable income computed with the adjustments (other than the 5-percent limitation)
provided in the first sentence of section 170(b)(2)’ for ‘the taxable income computed
with the adjustments provided in section 170(b)(2)’.
Subsec. (b)(3). Pub. L. 85-866, Sec. 33(b)(1), substituted ‘section 248’ for
‘sections 242 and 248’.
Subsec. (b)(4). Pub. L. 85-866, Sec. 33(c)(1), inserted ‘computed without the deductions provided in part VIII (except section
248) of subchapter 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 1990 AMENDMENT
Section 11802(d)(2) of Pub. L. 101-508 provided that: ‘The amendment made by paragraph
(1) (amending this section) shall not apply to any corporation with respect to which
an election under the second sentence of section 556(b)(1) of the Internal Revenue Code of 1986 (as in effect before the amendment made by paragraph (1)) is in effect unless
such corporation elects to have such amendment apply and agrees to such adjustments
as the Secretary of the Treasury or his delegate may require.'
EFFECTIVE DATE OF 1983 AMENDMENT
Amendment by Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision
of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable with respect to 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 1969 AMENDMENT
Amendment by Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1969, see section 201(g)
of Pub. L. 91-172, set out as a note under section 170 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by section 207(b)(6) of Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 207(c) of
Pub. L. 88-272, set out as a note under section 164 of this title.
Amendment by section 209(c)(2) of Pub. L. 88-272 applicable to contributions paid in taxable years beginning after Dec. 31, 1963,
see section 209(f)(1)
of Pub. L. 88-272, set out as a note under section 170 of this title.
EFFECTIVE DATE OF 1962 AMENDMENT
Amendment by Pub. L. 87-403 applicable only with respect to distribution made after Feb. 2, 1962, see section
3(g) of Pub. L. 87-403, set out as a note under section 312 of this title.
EFFECTIVE DATE OF 1958 AMENDMENT
Amendment by section 33(a) of Pub. L. 85-866 applicable to taxable years beginning after Dec. 31, 1953, and ending after Aug.
16, 1954, see section 1(c)(1) of Pub. L. 85-866, set out as a note under section 165 of this title.
Section 33(b)(2) of Pub. L. 85-866 provided that: ‘The amendment made by paragraph
(1) (amending this section) shall apply only with respect to taxable years ending
after December 31, 1957.’
Section 33(c)(2) of Pub. L. 85-866, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘The amendment made by paragraph (1)
(amending this section)
shall apply with respect to adjustments under section 556(b)(4) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954)
for taxable years ending after December 31, 1957.'
SAVINGS PROVISION
For provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired,
or items of income, loss, deduction, or credit taken into account prior to Nov. 5,
1990, for purposes of determining liability for tax for periods ending after Nov.
5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 29 of this title.
