Internal Revenue Code · 26 U.S.C.

§ 853. Foreign tax credit allowed to shareholders

In force Text current through Public Law 119-121 (October 9, 2026) release point 119-121

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. § 853

At a glance

Read from the text, the source credit and the official notes. Not part of the law.

Status: In force
Enacted: February 26, 1964 by Pub. L. 88–272
Last amended: December 22, 2010 by Pub. L. 111–325
Amendments: 6 dated changes in the source credit
Length: 6 subsections · 538 words · about 2 min to read
Cross-references: cites 5; cited by 4 Code sections and 6 other regulations
Regulations: 4 issued under this section

¶(a) General rule A regulated investment company—

¶(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

¶(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.

¶(b) Effect of election If the election provided in subsection (a) is effective for a taxable year—

¶(1) the regulated investment company—

¶(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

¶(B) shall be allowed as an addition to the dividends paid deduction for such taxable year the amount of such taxes;

¶(2) each shareholder of such investment company shall—

¶(A) include in gross income and treat as paid by him his proportionate share of such taxes, and

¶(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.

¶(c) Statements to shareholders The amounts to be treated by the shareholder, for purposes of subsection (b)(2), as his proportionate share of—

¶(1) taxes paid to any foreign country or possession of the United States, and

¶(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.

¶(d) Manner of making election

The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe by regulations.

¶(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.

¶(f) Cross references

¶(1) For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section 164(a) and section 901.

¶(2) For definition of foreign corporation, see section 7701(a)(5).

(Aug. 16, 1954, ch. 736, 68A Stat. 272; Pub. L. 88–272, title II, § 229(a)(3), Feb. 26, 1964, 78 Stat. 99; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99–514, title VI, § 655(a)(3), Oct. 22, 1986, 100 Stat. 2299; Pub. L. 105–34, title X, § 1053(b), Aug. 5, 1997, 111 Stat. 943; Pub. L. 105–206, title VI, § 6010(k)(1), (2), July 22, 1998, 112 Stat. 815; Pub. L. 109–135, title IV, § 403(aa)(1), Dec. 21, 2005, 119 Stat. 2630; Pub. L. 111–325, title III, § 301(c), Dec. 22, 2010, 124 Stat. 3544.)

Regulations under this section

Treasury regulations (26 CFR) issued under § 853

Cross-references

Computed from the citations in the text of Title 26 and 26 CFR.

This section cites 5 other sections

Cited by 4 Code sections

Cited in 6 regulations not issued under it

Amendment history

From the source credit and the official notes, newest first.

December 22, 2010Amended by Pub. L. 111–325Parts changed in 2010: (c) (d)
December 21, 2005Amended by Pub. L. 109–135Parts changed in 2005: (e)
July 22, 1998Amended by Pub. L. 105–206Parts changed in 1998: (c) (e)
August 5, 1997Amended by Pub. L. 105–34Parts changed in 1997: (c)
October 22, 1986Amended by Pub. L. 99–514Parts changed in 1986: (c)
October 4, 1976Amended by Pub. L. 94–455Parts changed in 1976: (d)
February 26, 1964Enacted by Pub. L. 88–272Parts changed in 1964: (c)

Where it sits in the Code

Nearby sections

Official notes

Show the Law Revision Counsel's notes (amendments, effective dates)

Editorial Notes

Amendments

2010—Subsec. (c). Pub. L. 111–325, § 301(c)(1)(B), substituted “Statements” for “Notice” in heading.

Pub. L. 111–325, § 301(c)(1)(A), which directed amendment 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”, was executed by making the substitution for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year” in concluding provisions to reflect the probable intent of Congress.

Subsec. (d). Pub. L. 111–325, § 301(c)(2), struck out “and notifying shareholders” after “election” in heading and “and the notice to shareholders required by subsection (c)” after “subsection (a)” in text.

2005—Subsec. (e). Pub. L. 109–135 amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows: “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, § 6010(k)(2), struck out at end “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).”

Subsecs. (e), (f). Pub. L. 105–206, § 6010(k)(1), added subsec. (e) and redesignated former subsec. (e) as (f).

1997—Subsec. (c). Pub. L. 105–34 inserted at end “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).”

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 Amendment

Amendment by Pub. L. 111–325 applicable to taxable years beginning after Dec. 22, 2010, see section 301(h) of Pub. L. 111–325, set out as a note under section 852 of this title.

Effective Date of 2005 Amendment

Amendment by Pub. L. 109–135 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

Effective Date of 1997 Amendment

Pub. L. 105–34, title X, § 1053(c), Aug. 5, 1997, 111 Stat. 943, provided that: “The amendments made by this section [amending this section and section 901 of this title] shall apply to dividends paid or accrued more than 30 days after the date of the enactment of this Act [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.