Internal Revenue Code · 26 U.S.C.
§ 78. Gross up for deemed paid foreign tax credit
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 78
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- October 16, 1962 by Pub. L. 87–834
- Last amended
- July 4, 2025 by Pub. L. 119–21
- Amendments
- 3 dated changes in the source credit
- Length
- 141 words · about 1 min to read
- Cross-references
- cites 3; cited by 7 Code sections and 38 other regulations
- Regulations
- 1 issued under this section
If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under subsections (a) and (d) of section 960 (determined without regard to the phrase “90 percent of” in subsection (d)(1) thereof) for such taxable year shall be treated for purposes of this title (other than sections 245 and 245A) as a dividend received by such domestic corporation from the foreign corporation.
(Added Pub. L. 87–834, § 9(b), Oct. 16, 1962, 76 Stat. 1001; amended Pub. L. 94–455, title X, § 1033(b)(1), Oct. 4, 1976, 90 Stat. 1628; Pub. L. 115–97, title I, § 14301(c)(1), Dec. 22, 2017, 131 Stat. 2222; Pub. L. 119–21, title VII, § 70312(a)(2), July 4, 2025, 139 Stat. 203.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 78
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 3 other sections
- § 960 Deemed paid credit for subpart F inclusions
- § 245 Dividends received from certain foreign corporations
- § 245A Deduction for foreign source-portion of dividends received by domestic corporations from specified 10-percent owned foreign corporations
Cited by 7 Code sections
- § 163(j)(8)(A)(vi) Interest
- § 250(a)(1)(B)(ii) Foreign-derived deduction eligible income and net CFC tested income
- § 901(j)(3) Taxes of foreign countries and of possessions of United States
- § 904(d)(2)(F)(ii) Limitation on credit
- § 908(b) Reduction of credit for participation in or cooperation with an international boycott
- § 965(g)(4) Treatment of deferred foreign income upon transition to participation exemption system of taxation
- § 1291(g)(1)(A) Interest on tax deferral
Cited in 38 regulations not issued under it
- § 1.163(j)-1 Definitions.
- § 1.250(a)-1 Deduction for foreign-derived intangible income (FDII) and global intangible low-taxed income (GILTI).
- § 1.250(b)-1 Computation of foreign-derived intangible income (FDII).
- § 1.367(b)-7 Carryover of earnings and profits and foreign income taxes in certain foreign-to-foreign nonrecognition transactions.
- § 1.535-2 Adjustments to taxable income.
- § 1.545-2 Adjustments to taxable income.
- § 1.861-3 Dividends and income inclusions under sections 951, 951A, and 1293 and associated section 78 dividends.
- § 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
- § 1.865-2 Loss with respect to stock.
- § 1.897-9T Treatment of certain interest in publicly traded corporations, definition of foreign person, and foreign governments and international organizations (temporary).
- § 1.901-3 Reduction in amount of foreign taxes on foreign mineral income allowed as a credit.
- § 1.901(m)-3 Disqualified tax amount and aggregate basis difference carryover.
- § 1.902-0 Outline of regulations provisions for section 902.
- § 1.902-1 Credit for domestic corporate shareholder of a foreign corporation for foreign income taxes paid by the foreign corporation.
- § 1.902-2 Treatment of deficits in post-1986 undistributed earnings and pre-1987 accumulated profits of a first- or lower-tier corporation for purposes of computing an amount of foreign taxes deemed paid under § 1.902-1.
- § 1.902-3 Credit for domestic corporate shareholder of a foreign corporation for foreign income taxes paid with respect to accumulated profits of taxable years of the foreign corporation beginning before January 1, 1987.
- § 1.902-4 Rules for distributions attributable to accumulated profits for taxable years in which a first-tier corporation was a less developed country corporation.
- § 1.904-4 Separate application of section 904 with respect to certain categories of income.
- § 1.904-5 Look-through rules as applied to controlled foreign corporations and other entities.
- § 1.905-1 When credit for foreign income taxes may be taken.
- § 1.905-3 Adjustments to U.S. tax liability and to current earnings and profits as a result of a foreign tax redetermination.
- § 1.907-0 Outline of regulation provisions for section 907.
- § 1.907(a)-1 Reduction in taxes paid on FOGEI (for taxable years beginning after December 31, 1982).
- § 1.907(c)-2 Section 907(c)(3) items (for taxable years beginning after December 31, 1982).
Show 14 more
- § 1.907(c)-3 FOGEI and FORI taxes (for taxable years beginning after December 31, 1982).
- § 1.951-1 Amounts included in gross income of United States shareholders.
- § 1.960-4 Additional foreign tax credit in year of receipt of previously taxed earnings and profits.
- § 1.960-6 Overpayments resulting from increase in limitation for taxable year of exclusion.
- § 1.962-1 Limitation of tax for individuals on amounts included in gross income under section 951(a).
- § 1.963-2 Determination of the amount of the minimum distribution.
- § 1.965-5 Allowance of credit or deduction for foreign income taxes.
- § 1.965-7 Elections, payment, and other special rules.
- § 1.1502-32 Investment adjustments.
- § 1.1502-50 Consolidated section 250.
- § 1.1503(d)-5 Attribution of items and basis adjustments.
- § 1.1503(d)-7 Examples.
- § 1.6038-2 Information returns required of United States persons with respect to annual accounting periods of certain foreign corporations.
- § 1.7874-11 Rules regarding inversion gain.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 119–21
- Amended by Pub. L. 115–97
- Amended by Pub. L. 94–455
- Added by Pub. L. 87–834
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part II ITEMS SPECIFICALLY INCLUDED IN GROSS INCOME
Nearby sections
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2025—Pub. L. 119–21 substituted “subsections (a) and (d)” for “subsections (a), (b), and (d)” and “90 percent” for “80 percent”.
2017—Pub. L. 115–97 amended section generally. Prior to amendment, text read as follows: “If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under section 902(a) (relating to credit for corporate stockholder in foreign corporation) or under section 960(a)(1) (relating to taxes paid by foreign corporation) for such taxable year shall be treated for purposes of this title (other than section 245) as a dividend received by such domestic corporation from the foreign corporation.”
1976—Pub. L. 94–455 substituted “section 902(a)” for “section 902(a)(1)” and “section 960(a)(1)” for “section 960(a)(1)(C)”.
Statutory Notes and Related Subsidiaries
Effective Date of 2025 Amendment
Pub. L. 119–21, title VII, § 70312(c), July 4, 2025, 139 Stat. 203, provided that:
“(1) In general.— The amendments made by subsection (a) [amending this section and section 960 of this title] shall apply to taxable years beginning after December 31, 2025.“(2) Disallowance.— The amendment made by subsection (b) [amending section 960 of this title] shall apply to foreign income taxes paid or accrued (or deemed paid under section 960(b)(1) of the Internal Revenue Code of 1986) with respect to any amount excluded from gross income under section 959(a) of such Code by reason of an inclusion in gross income under section 951A(a) of such Code after June 28, 2025.”
Effective Date of 2017 Amendment
Pub. L. 115–97, title I, § 14301(d), Dec. 22, 2017, 131 Stat. 2225, provided that: “The amendments made by this section [amending this section and sections 245, 535, 545, 814, 865, 901, 904 to 909, 958 to 960, 1291, 1293, and 6038 of this title and repealing section 902 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 2017, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.”
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455 applicable on different dates depending on the date the distributions were received, see section 1033(c) of Pub. L. 94–455, set out as a note under section 960 of this title.
Effective Date
Pub. L. 87–834, § 9(e), Oct. 16, 1962, 76 Stat. 1001, provided that:
“The amendments made by this section [enacting this section and amending sections 535, 545, 861, 901, and 902 of this title] shall apply—“(1) in respect of any distribution received by a domestic corporation after December 31, 1964, and“(2) in respect of any distribution received by a domestic corporation before January 1, 1965, in a taxable year of such corporation beginning after December 31, 1962, but only to the extent that such distribution is made out of the accumulated profits of a foreign corporation for a taxable year (of such foreign corporation) beginning after December 31, 1962.For purposes of paragraph (2), a distribution made by a foreign corporation out of its profits which are attributable to a distribution received from a foreign subsidiary to which [former] section 902(b) applies shall be treated as made out of the accumulated profits of a foreign corporation for a taxable year beginning before January 1, 1963, to the extent that such distribution was paid out of the accumulated profits of such foreign subsidiary for a taxable year beginning before January 1, 1963.”