Internal Revenue Code · 26 U.S.C.

§ 909. Suspension of taxes and credits until related income taken into account

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. § 909

At a glance

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

Status: In force
Added: August 10, 2010 by Pub. L. 111–226
Last amended: December 22, 2017 by Pub. L. 115–97
Amendments: 1 dated changes in the source credit
Length: 5 subsections · 606 words · about 3 min to read
Defines: 3 terms
Cross-references: cites 5; cited by 0 Code sections and 2 other regulations
Regulations: 7 issued under this section

¶(a) In general

If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by the taxpayer, such tax shall not be taken into account for purposes of this title before the taxable year in which the related income is taken into account under this chapter by the taxpayer.

¶(b) Special rules with respect to specified 10-percent owned foreign corporations If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by a specified 10-percent owned foreign corporation (as defined in section 245A(b) without regard to paragraph (2) thereof), such tax shall not be taken into account—

¶(1) for purposes of section 960, or

¶(2) for purposes of determining earnings and profits under section 964(a),

before the taxable year in which the related income is taken into account under this chapter by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.

¶(c) Special rules For purposes of this section—

¶(1) Application to partnerships, etc.

In the case of a partnership, subsections (a) and (b) shall be applied at the partner level. Except as otherwise provided by the Secretary, a rule similar to the rule of the preceding sentence shall apply in the case of any S corporation or trust.

¶(2) Treatment of foreign taxes after suspension

In the case of any foreign income tax not taken into account by reason of subsection (a) or (b), except as otherwise provided by the Secretary, such tax shall be so taken into account in the taxable year referred to in such subsection (other than for purposes of section 986(a)) as a foreign income tax paid or accrued in such taxable year.

¶(d) Definitions For purposes of this section—

¶(1) Foreign tax credit splitting event

There is a foreign tax credit splitting event with respect to a foreign income tax if the related income is (or will be) taken into account under this chapter by a covered person.

¶(2) Foreign income tax

The term “foreign income tax” means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States.

¶(3) Related income

The term “related income” means, with respect to any portion of any foreign income tax, the income (or, as appropriate, earnings and profits) to which such portion of foreign income tax relates.

¶(4) Covered person The term “covered person” means, with respect to any person who pays or accrues a foreign income tax (hereafter in this paragraph referred to as the “payor”)—

¶(A) any entity in which the payor holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value),

¶(B) any person which holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value) in the payor,

¶(C) any person which bears a relationship to the payor described in section 267(b) or 707(b), and

¶(D) any other person specified by the Secretary for purposes of this paragraph.

¶(e) Regulations The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which provides—

¶(1) appropriate exceptions from the provisions of this section, and

¶(2) for the proper application of this section with respect to hybrid instruments.

(Added Pub. L. 111–226, title II, § 211(a), Aug. 10, 2010, 124 Stat. 2394; amended Pub. L. 115–97, title I, § 14301(c)(29), (30), Dec. 22, 2017, 131 Stat. 2224.)

Terms defined here

Where the text says “the term … means”. Select a term to jump to its definition.

covered person § 909(d)(4)
foreign income tax § 909(d)(2)
related income § 909(d)(3)

Regulations under this section

Treasury regulations (26 CFR) issued under § 909

Cross-references

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

This section cites 5 other sections

Cited in 2 regulations not issued under it

Amendment history

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

December 22, 2017Amended by Pub. L. 115–97Parts changed in 2017: (b) (b)(1) (d)(5)
August 10, 2010Added by Pub. L. 111–226

Where it sits in the Code

Nearby sections

§ 905 Applicable rules
§ 906 Nonresident alien individuals and foreign corporations
§ 907 Special rules in case of foreign oil and gas income
§ 908 Reduction of credit for participation in or cooperation with an international boycott
§ 909 Suspension of taxes and credits until related income taken into account

Official notes

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

Editorial Notes

Amendments

2017—Subsec. (b). Pub. L. 115–97, § 14301(c)(29)(A), (C), (D), substituted “specified 10-percent owned foreign corporations” for “section 902 corporations” in heading, “specified 10-percent owned foreign corporation (as defined in section 245A(b) without regard to paragraph (2) thereof)” for “section 902 corporation” in introductory provisions, and “by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.” for “by such section 902 corporation or a domestic corporation which meets the ownership requirements of subsection (a) or (b) of section 902 with respect to such section 902 corporation.” in concluding provisions.

Subsec. (b)(1). Pub. L. 115–97, § 14301(c)(29)(B), struck out “902 or” after “for purposes of section”.

Subsec. (d)(5). Pub. L. 115–97, § 14301(c)(30), struck out par. (5). Text read as follows: “The term ‘section 902 corporation’ means any foreign corporation with respect to which one or more domestic corporations meets the ownership requirements of subsection (a) or (b) of section 902.”

Effective Date of 2017 Amendment

Amendment by Pub. L. 115–97 applicable to taxable years of foreign corporations beginning after Dec. 31, 2017, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see section 14301(d) of Pub. L. 115–97, set out as a note under section 78 of this title.

Effective Date

Pub. L. 111–226, title II, § 211(c), Aug. 10, 2010, 124 Stat. 2395, provided that:

“The amendments made by this section [enacting this section] shall apply to—
“(1) foreign income taxes (as defined in section 909(d) of the Internal Revenue Code of 1986, as added by this section) paid or accrued in taxable years beginning after December 31, 2010; and

“(2) foreign income taxes (as so defined) paid or accrued by a [former] section 902 corporation (as so defined) in taxable years beginning on or before such date (and not deemed paid under section 902(a) or 960 of such Code on or before such date), but only for purposes of applying sections 902 and 960 with respect to periods after such date.

Section 909(b)(2) of the Internal Revenue Code of 1986, as added by this section, shall not apply to foreign income taxes described in paragraph (2).”