I.R.C. § 958(a) Direct And Indirect Ownership
I.R.C. § 958(a)(1) General Rule —
For purposes of this subpart (other than section 960), stock owned means—
I.R.C. § 958(a)(1)(A) —
stock owned directly, and
I.R.C. § 958(a)(1)(B) —
stock owned with the application of paragraph (2).
I.R.C. § 958(a)(2) Stock Ownership Through Foreign Entities —
For purposes of subparagraph (B) of paragraph (1), stock owned, directly or indirectly,
by or for a foreign corporation, foreign partnership, or foreign trust or foreign
estate (within the meaning of section 7701(a)(31))
shall be considered as being owned proportionately by its shareholders, partners,
or beneficiaries. Stock considered to be owned by a person by reason of the application
of the preceding sentence shall, for
purposes of applying such sentence, be treated as actually owned by such person.
I.R.C. § 958(a)(3) Special Rule For Mutual Insurance Companies —
For purposes of applying paragraph (1) in the case of a foreign mutual insurance
company, the term “stock” shall include any certificate entitling the holder to voting
power in the corporation.
I.R.C. § 958(b) Constructive Ownership —
For purposes of sections 951(b), 954(d)(3), 956(c)(2), and 957, section 318(a) (relating to constructive ownership of stock) shall apply to the extent that the
effect is to treat any United States person as a United States shareholder within
the meaning of section 951(b), to treat a person as a related person within the meaning of section 954(d)(3), to treat the stock
of a domestic corporation as owned by a United States shareholder of the controlled
foreign corporation for purposes of section 956(c)(2), or to treat a foreign corporation as a controlled foreign corporation under section
957, except that—
I.R.C. § 958(b)(1) —
In applying paragraph (1)(A) of section 318(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign
estate) shall not be considered as owned by a citizen or by a resident alien individual.
I.R.C. § 958(b)(2) —
In applying subparagraphs (A), (B), and (C) of section 318(a)(2), if a partnership, estate, trust, or corporation owns, directly or indirectly, more
than 50 percent of the total combined voting power of all classes of stock entitled
to vote of a corporation, it shall be considered as owning all the stock entitled
to vote.
I.R.C. § 958(b)(3) —
In applying subparagraph (C) of section 318(a)(2), the phrase “10 percent” shall be substituted for the phrase “50 percent"
used in subparagraph (C).
Paragraph (1) shall not apply for purposes of section 956(c)(2) to treat stock of a domestic corporation as not owned by a United States shareholder.
(Added Pub. L. 87-834, 12(a), Oct. 16, 1962, 76 Stat. 1018, and amended Pub. L. 88-554, 4(b)(5), Aug. 31, 1964, 78 Stat. 763; Pub. L. 94-455, title X, 1021(b), Oct. 4, 1976, 90 Stat. 1619; Pub. L. 104-188, title I, 1703(i)(4), 1704(t)(7), Aug. 20, 1996, 110 Stat. 1755; Pub. L. 115-97, title I, Secs. 14213(a), 14301(c)(31), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017—Subsec. (a)(1). Pub. L. 115-97, Sec. 14301(c)(31), amended par. (1) by substituting “960” for “960(a)(1)”.
Subsec. (b)(4). Pub. L. 115-97, Sec. 14213(a)(1), amended subsec. (b) by striking par. (4). Before being struck, it read as follows:
“(4) Subparagraph (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which
is owned by a person who is not a United States person.”
Subsec. (b). Pub. L. 115-97, Sec. 14213(a)(2), amended the last sentence of subsec. (b) by substituting “paragraph (1)” for “paragraphs
(1) and (4)”.
1996--Subsec. (a)(1). Pub. L. 104-188, sec. 1704(t)(7), substituted “section 960(a)(1)” for “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii),
and 960(a)(1)”.
Subsec. (b). Pub. L. 104-188, sec. 1703(i)(4), substituted “956(c)(2)” for
“956(b)(2)” each place it appeared.
1976--Subsec. (b). Pub. L. 94-455 inserted “956(b)(2)” after
“purposes of sections 951(b), 954(d)(3),”, “to treat the stock of a domestic corporation
as owned by a United States shareholder of the controlled foreign corporation for
purposes of section 956(b)(2)"
after “meaning of section 954(d)(3)” and “Paragraphs (1) and (4) shall not apply for
purposes of section 556(b)(2) to treat stock of a domestic corporation as not owned
by a United States shareholder” following subpar. (4).
1964--Subsec. (b). Pub. L. 88-554 redesignated pars. (4) and
(5) as (3) and (4), respectively, struck out former par. (3) which related to ownership
of stock by a partnership, estate, trust, or corporation for purposes of applying
first sentence of subpars. (A)
and (B), and subpar. (C)(i) of section 318(a)(2) of this title, and made amendments
throughout subsec. (b) to conform to changes made in section 318 of this title by
Pub. L. 88-554.
EFFECTIVE DATE OF 2017 AMENDMENTS
Amendments by Pub. L. 115-97, Sec. 14213(a), effective for the last taxable year of foreign corporations beginning before January
1, 2018, and each subsequent taxable year of such foreign corporations, and (2)
taxable years of United States shareholders in which or with which such taxable years
of foreign corporations end.
Amendment by Pub. L. 115-97, Sec. 14301(c)(31), 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 OF 1996 AMENDMENT
Amendment by Pub. L. 104-188, sec. 1703(i)(4), effective as if included in the provision of the Revenue Reconciliation Act of 1993
to which such amendment relates.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by Pub. L. 94-455 applicable to taxable years of foreign corporations beginning after Dec. 31, 1975,
and to taxable years of United States shareholders within which or with which such
taxable years of such corporations end, see section 1021(c) of Pub. L. 94-455, set out as a note under section 956 of this title.
EFFECTIVE DATE OF 1964 AMENDMENT
Amendment by Pub. L. 88-554 effective Aug. 31, 1964, except that for purposes of sections 302 and 304 of this
title, such amendments shall not apply to distributions in payment for stock acquisitions
or redemptions, if such acquisitions or redemptions occurred before Aug. 31, 1964,
see section 4(c) of Pub. L. 88-554, set out as a note under section 318 of this title.
