Internal Revenue Code · 26 U.S.C.
§ 894. Income affected by treaty
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. § 894
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- November 13, 1966 by Pub. L. 89–809
- Last amended
- August 5, 1997 by Pub. L. 105–34
- Amendments
- 2 dated changes in the source credit
- Length
- 3 subsections · 459 words · about 2 min to read
- Cross-references
- cites 3; cited by 5 Code sections and 9 other regulations
- Regulations
- 1 issued under this section
The provisions of this title shall be applied to any taxpayer with due regard to any treaty obligation of the United States which applies to such taxpayer.
For purposes of applying any exemption from, or reduction of, any tax provided by any treaty to which the United States is a party with respect to income which is not effectively connected with the conduct of a trade or business within the United States, a nonresident alien individual or a foreign corporation shall be deemed not to have a permanent establishment in the United States at any time during the taxable year. This subsection shall not apply in respect of the tax computed under section 877(b).
The Secretary shall prescribe such regulations as may be necessary or appropriate to determine the extent to which a taxpayer to which paragraph (1) does not apply shall not be entitled to benefits under any income tax treaty of the United States with respect to any payment received by, or income attributable to any activities of, an entity organized in any jurisdiction (including the United States) that is treated as a partnership or is otherwise treated as fiscally transparent for purposes of this title (including a common investment trust under section 584, a grantor trust, or an entity that is disregarded for purposes of this title) and is treated as fiscally nontransparent for purposes of the tax laws of the jurisdiction of residence of the taxpayer.
(Aug. 16, 1954, ch. 736, 68A Stat. 284; Pub. L. 89–809, title I, § 105(a), Nov. 13, 1966, 80 Stat. 1563; Pub. L. 100–647, title I, § 1012(aa)(6), Nov. 10, 1988, 102 Stat. 3533; Pub. L. 105–34, title X, § 1054(a), Aug. 5, 1997, 111 Stat. 943.)
Regulations under this section
Treasury regulations (26 CFR) issued under § 894
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 3 other sections
Cited by 5 Code sections
- § 269B(d) Stapled entities
- § 643(a)(6)(B) Definitions applicable to subparts A, B, C, and D
- § 842(c)(1)(A)(ii) Foreign companies carrying on insurance business
- § 897(k)(3)(B)(iii)(I) Disposition of investment in United States real property
- § 7874(f) Rules relating to expatriated entities and their foreign parents
Cited in 9 regulations not issued under it
- § 1.643(a)-6 Income of foreign trust.
- § 1.871-12 Determination of tax on treaty income.
- § 1.882-5 Determination of interest deduction.
- § 1.884-1 Branch profits tax.
- § 1.1441-1 Requirement for the deduction and withholding of tax on payments to foreign persons.
- § 1.1441-6 Claim of reduced withholding under an income tax treaty.
- § 1.1441-7 General provisions relating to withholding agents.
- § 1.1451-1 Tax-free covenant bonds issued before January 1, 1934.
- § 509.102 Applicable provisions of law.
Amendment history
From the source credit and the official notes, newest first.
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter N Tax Based on Income From Sources Within or Without the United States
- Part II NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
- Subpart D Miscellaneous Provisions
Nearby sections
- § 891 Doubling of rates of tax on citizens and corporations of certain foreign countries
- § 892 Income of foreign governments and of international organizations
- § 893 Compensation of employees of foreign governments or international organizations
- § 894 Income affected by treaty
- § 895 Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits
- § 896 Adjustment of tax on nationals, residents, and corporations of certain foreign countries
- § 897 Disposition of investment in United States real property
- § 898 Taxable year of certain foreign corporations
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
1997—Subsec. (c). Pub. L. 105–34 added subsec. (c).
1988—Subsec. (a). Pub. L. 100–647 substituted “Treaty provisions” for “Income affected by treaty” in heading and amended text generally. Prior to amendment, text read as follows: “Income of any kind, to the extent required by any treaty obligation of the United States, shall not be included in gross income and shall be exempt from taxation under this subtitle.”
1966—Pub. L. 89–809 designated existing provisions as subsec. (a), added subsec. (b), and substituted “affected by treaty” for “exempt under treaty” in section catchline.
Statutory Notes and Related Subsidiaries
Effective Date of 1997 Amendment
Pub. L. 105–34, title X, § 1054(b), Aug. 5, 1997, 111 Stat. 944, provided that: “The amendments made by this section [amending this section] shall apply upon the date of enactment of this Act [Aug. 5, 1997].”
Effective Date of 1988 Amendment
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1966 Amendment
Pub. L. 89–809, title I, § 105(d), Nov. 13, 1966, 80 Stat. 1565, provided that: “The amendments made by this section (other than subsections (d) and (f)) [amending this section and enacting section 896 of this title] shall apply with respect to taxable years beginning after December 31, 1966.”