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Sec. 853. Foreign Tax Credit Allowed To Shareholders

I.R.C. § 853(a) General Rule
A regulated investment company—
I.R.C. § 853(a)(1)
more than 50 percent of the value (as defined in section 851(c)(4)) of whose total assets at the close of the taxable year consists of stock or securities in foreign corporations, and
I.R.C. § 853(a)(2)
which meets the requirements of section 852(a) for the taxable year,
may, for such taxable year, elect the application of this section with respect to income, war profits, and excess profits taxes described in section 901(b)(1), which are paid by the investment company during such taxable year to foreign countries and possessions of the United States.
I.R.C. § 853(b) Effect Of Election
If the election provided in subsection (a) is effective for a taxable year—
I.R.C. § 853(b)(1)
the regulated investment company—
I.R.C. § 853(b)(1)(A)
shall not, with respect to such taxable year, be allowed a deduction under section 164(a) or a credit under section 901 for taxes to which subsection (a) is applicable, and
I.R.C. § 853(b)(1)(B)
shall be allowed as an addition to the dividends paid deduction for such taxable year the amount of such taxes;
I.R.C. § 853(b)(2)
each shareholder of such investment company shall—
I.R.C. § 853(b)(2)(A)
include in gross income and treat as paid by him his proportionate share of such taxes, and
I.R.C. § 853(b)(2)(B)
treat as gross income from sources within the respective foreign countries and possessions of the United States, for purposes of applying subpart A of part III of subchapter N, the sum of his proportionate share of such taxes and the portion of any dividend paid by such investment company which represents income derived from sources within foreign countries or possessions of the United States.
I.R.C. § 853(c) Statements To Shareholders
The amounts to be treated by the shareholder, for purposes of subsection (b)(2), as his proportionate share of—
I.R.C. § 853(c)(1)
taxes paid to any foreign country or possession of the United States, and
I.R.C. § 853(c)(2)
gross income derived from sources within any foreign country or possession of the United States,
shall not exceed the amounts so reported by the company in a written statement furnished to such shareholder.
I.R.C. § 853(d) Manner Of Making Election
The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe by regulations.
I.R.C. § 853(e) Treatment Of Certain Taxes Not Allowed As A Credit Under Section 901
This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of subsection (k) or (l) of such section.
I.R.C. § 853(f) Cross References
I.R.C. § 853(f)(1)
For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section 164(a) and section 901.
I.R.C. § 853(f)(2)
For definition of foreign corporation, see section 7701(a)(5).
(Aug. 16, 1954, ch. 736, 68A Stat. 272; Feb. 26, 1964, Pub. L. 88-272, title II, 229(a)(3), 78 Stat. 99; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1906(b)(13)(A), 90 Stat. 1834; Oct. 22, 1986, Pub. L. 99-514, title VI, 655(a)(3), 100 Stat. 2299; Pub. L. 105-34, title X, Sec. 1053(b), Aug. 5, 1997, 111 Stat 788; Pub. L. 105-206, title VI, Sec. 6010(k), July 22, 1998, 112 Stat 685; Pub. L. 109-135, title IV, Sec. 403(aa)(1), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 111-325, Sec. 301(c), Dec. 22, 2010, 124 Stat. 3537.)
BACKGROUND NOTES
AMENDMENTS
2010—Subsec. (c). Pub. L. 111-325, Sec. 301(c)(1)(B), amended the heading of subsec. (c) by substituting “Statements” for “Notice”.
Subsec. (c). Pub. L. 111-325, Sec. 301(c)(1)(A), amended subsec. (c) by substituting “so reported by the company in a written statement furnished to such shareholder" for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of the taxable year”.
Subsec. (d). Pub. L. 111-325, Sec. 301(c)(2)(B), amended the heading of subsec. (d) by striking “And Notifying Shareholders”.
Subsec. (d). Pub. L. 111-325, Sec. 301(c)(2)(A), amended subsec. (d) by striking “and the notice to shareholders required by subsection (c)”.
2005—Subsec. (e). Pub. L. 109-135, Sec. 403(aa)(1), amended subsec. (e). Before amendment, it read as follows:
“(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k). --
“This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”
1998--Subsec. (c). Pub. L. 105-206, Sec. 6010(k)(2), amended subsec. (c) by striking the last sentence. Prior to amendment it read as follows: “Such notice shall also include the amount of such taxes which (without regard to the election under this section) would not be allowable as a credit under section 901(a) to the regulated investment company by reason of section 901(k).”
Subsec. (e). Pub. L. 105-206, Sec. 6010(k)(1), redesignated subsec. (e) as subsec. (f) and added a new subsec. (e).
1997--Subsec. (c). Pub. L. 105-34, Sec. 1053(b) added a new sentence at the end of subsec. (c).
1986--Subsec. (c). Pub. L. 99-514 substituted “60 days” for “45 days”.
1976--Subsec. (d). Pub. L. 94-455 struck out “or his delegate" after “Secretary”.
1964--Subsec. (c). Pub. L. 88-272 substituted “45 days” for “30 days”.
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendments by Sec. 301(c) of Pub. L. 111-325 effective for taxable years beginning after the date of the enactment of this Act [Enacted: Dec. 22, 2010].
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Sec. 403(aa)(1) of Pub. L. 109-135 effective as if included in the provisions of the American Jobs Creation Act of 2004 [Pub. L. 108-357, Sec. 832] to which it relates.
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendments by Sec. 6010(k) of Pub. L. 105-206 effective as if included in the provisions of the Taxpayer Relief Act of 1997 to which they relate [Effective Date of Pub. L. 105-34, Sec. 1053: Dividends paid or accrued more than 30 days after Aug. 5, 1997].
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1053(b) of Pub. L. 105-34 provided that:
“The amendments made by this section shall apply to dividends paid or accrued more than 30 days after the date of the enactment of this Act [Enactment Date: Aug. 5, 1997]”.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by Pub. L. 99-514 applicable to taxable years beginning after Oct. 22, 1986, see section 655(b) of Pub. L. 99-514, set out as a note under section 852 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-272 applicable to taxable years of regulated investment companies ending on or after Feb. 26, 1964, see section 229(c) of Pub. L. 88-272, set out as a note under section 852 of this title.