Treasury Regulations · 26 CFR
§ 1.961-1. Increase in basis of stock in controlled foreign corporations and of other property.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 961
Cite as 26 CFR § 1.961-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- September 16, 1965 by T.D. 6850
- Issued under
- 26 U.S.C. § 961
- Length
- 665 words · about 3 min to read
- Cross-references
- cites 5 Code sections and 1 regulation; cited by 2
Domestic corporation M owns 800 of the 1,000 shares of the one class of stock in controlled foreign corporation R which owns all of the one class of stock in controlled foreign corporation S. Corporations M, R, and S use the calendar year as a taxable year. In 1964, S Corporation has $100,000 of earnings and profits after the payment of $11,250 of foreign income taxes, and $100,000 of subpart F income. Corporation R has no earnings and profits. With respect to S Corporation, M Corporation is required to include in gross income $80,000 (800/1,000 × $100,000) under section 951(a), and $9,000 ($80,000/$100,000 × $11,250) under section 78. On December 31, 1964, M Corporation must increase the basis of each share of its stock in R Corporation by $100 ($80,000/800).
A, an individual United States shareholder, owns all of the 1,000 shares of the one class of stock in controlled foreign corporation T. Corporation T and A use the calendar year as a taxable year. In 1964, T Corporation has $80,000 of earnings and profits after the payment of $20,000 of foreign income taxes, and $80,000 of subpart F income. A makes the election under section 962 for 1964 and in accordance with such election pays a United States tax of $23,000 with respect to the $80,000 included in his gross income under section 951(a). On December 31, 1964, A must increase the basis of each share of his stock in T Corporation by $23 ($23,000/1,000).
[T.D. 6850, 30 FR 11854, Sept. 16, 1965]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 958 Rules for determining stock ownership
- § 961 Adjustments to basis of stock in controlled foreign corporations and of other property
- § 951 Amounts included in gross income of United States shareholders
- § 962 Election by individuals to be subject to tax at corporate rates
- § 7701 Definitions
Regulations it cites
Cited by 2 other regulations
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Issued by T.D. 6850 (30 FR 11854)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Controlled foreign corporations
Nearby sections
- § 1.960-4 Additional foreign tax credit in year of receipt of previously taxed earnings and profits.
- § 1.960-5 Credit for taxable year of inclusion binding for taxable year of exclusion.
- § 1.960-6 Overpayments resulting from increase in limitation for taxable year of exclusion.
- § 1.960-7 Applicability dates.
- § 1.961-1 Increase in basis of stock in controlled foreign corporations and of other property.
- § 1.961-2 Reduction in basis of stock in foreign corporations and of other property.
- § 1.962-1 Limitation of tax for individuals on amounts included in gross income under section 951(a).
- § 1.962-2 Election of limitation of tax for individuals.
- § 1.962-3 Treatment of actual distributions.