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Internal Revenue Code, § 909. Suspension Of Taxes And Credits Until Related Income Taken Into Account

I.R.C. § 909(a) In General
If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by the taxpayer, such tax shall not be taken into account for purposes of this title before the taxable year in which the related income is taken into account under this chapter by the taxpayer.
I.R.C. § 909(b) Special Rules With Respect To Specified 10-Percent Owned
If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by a specified 10-percent owned foreign corporation (as defined in section 245A(b) without regard to paragraph (2) thereof) , such tax shall not be taken into account—
I.R.C. § 909(b)(1)
for purposes of section 960, or
I.R.C. § 909(b)(2)
for purposes of determining earnings and profits under section 964(a),
before the taxable year in which the related income is taken into account under this chapter by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.
I.R.C. § 909(c) Special Rules
For purposes of this section—
I.R.C. § 909(c)(1) Application To Partnerships, Etc.
In the case of a partnership, subsections (a) and (b) shall be applied at the partner level. Except as otherwise provided by the Secretary, a rule similar to the rule of the preceding sentence shall apply in the case of any S corporation or trust.
I.R.C. § 909(c)(2) Treatment Of Foreign Taxes After Suspension
In the case of any foreign income tax not taken into account by reason of subsection (a) or (b), except as otherwise provided by the Secretary, such tax shall be so taken into account in the taxable year referred to in such subsection (other than for purposes of section 986(a)) as a foreign income tax paid or accrued in such taxable year.
I.R.C. § 909(d) Definitions
For purposes of this section—
I.R.C. § 909(d)(1) Foreign Tax Credit Splitting Event
There is a foreign tax credit splitting event with respect to a foreign income tax if the related income is (or will be) taken into account under this chapter by a covered person.
I.R.C. § 909(d)(2) Foreign Income Tax
The term “foreign income tax” means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States.
I.R.C. § 909(d)(3) Related Income
The term “related income” means, with respect to any portion of any foreign income tax, the income (or, as appropriate, earnings and profits) to which such portion of foreign income tax relates.
I.R.C. § 909(d)(4) Covered Person
The term “covered person” means, with respect to any person who pays or accrues a foreign income tax (hereafter in this paragraph referred to as the “payor”)—
I.R.C. § 909(d)(4)(A)
any entity in which the payor holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value),
I.R.C. § 909(d)(4)(B)
any person which holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value) in the payor,
I.R.C. § 909(d)(4)(C)
any person which bears a relationship to the payor described in section 267(b) or 707(b), and
I.R.C. § 909(d)(4)(D)
any other person specified by the Secretary for purposes of this paragraph.
I.R.C. § 909(d)(5) Repealed
[Repealed. Pub. L. 115-97, Sec. 14301(c)(30), Dec. 22, 2017, 131 Stat. 2054.]
I.R.C. § 909(e) Regulations
The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which provides—
I.R.C. § 909(e)(1)
appropriate exceptions from the provisions of this section, and
I.R.C. § 909(e)(2)
for the proper application of this section with respect to hybrid instruments.
(Added by Pub. L. 111-226, title II, Sec. 211(a), Aug. 10, 2010; amended by Pub. L. 115-97, title I, Sec. 14301(c)(29), (30), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 - Subsec. (b). Pub. L. 115-97, Sec. 14301(c)(29)(D), amended the heading of subsec. (b) by substituting “Specified 10-Percent Owned Foreign Corporations” for “Section 902 Corporations”.
Subsec. (b). Pub. L. 115-97, Sec. 14301(c)(29)(A), amended the matter preceding par. (1) in subsec. (b) by substituting “specified 10-percent owned foreign corporation (as defined in section 245A(b) without regard to paragraph (2) thereof)” for “section 902 corporation”.
Subsec. (b)(1). Pub. L. 115-97, Sec. 14301(c)(29)(B), amended par. (1) by striking “902 or”.
Subsec. (b). Pub. L. 115-97, Sec. 14301(c)(29)(C), amended the matter following par. (2) by substituting “by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.’’ for “by such section 902 corporation or a domestic corporation which meets the ownership requirements of subsection (a) or (b) of section 902 with respect to such section 902 corporation.”
Subsec. (d)(5). Pub. L. 115-97, Sec. 14301(c)(30), struck par. (5). Before being struck, it read as follows:
“(5) Section 902 Corporation.—The term ‘section 902 corporation' means any foreign corporation with respect to which one or more domestic corporations meets the ownership requirements of subsection (a) or (b) of section 902.”
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 14301(c), effective for taxable years of foreign corporations beginning after December 31, 2017, and for taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.
EFFECTIVE DATE
Section 211(c) of Pub. L. 111-226 provided that:
“(c) Effective Date.—The amendments made by this section shall apply to--
“(1) foreign income taxes (as defined in section 909(d) of the Internal Revenue Code of 1986, as added by this section) paid or accrued in taxable years beginning after December 31, 2010; and
“(2) foreign income taxes (as so defined) paid or accrued by a section 902 corporation (as so defined) in taxable years beginning on or before such date (and not deemed paid under section 902(a) or 960 of such Code on or before such date), but only for purposes of applying sections 902 and 960 with respect to periods after such date.
Section 909(b)(2) of the Internal Revenue Code of 1986, as added by this section, shall not apply to foreign income taxes described in paragraph (2).”