Internal Revenue Code · 26 U.S.C.
§ 934. Limitation on reduction in income tax liability incurred to the Virgin Islands
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. § 934
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Added
- September 14, 1960 by Pub. L. 86–779
- Last amended
- October 22, 2004 by Pub. L. 108–357
- Amendments
- 6 dated changes in the source credit
- Length
- 2 subsections · 485 words · about 2 min to read
- Defines
- 1 term
- Cross-references
- cites 2; cited by 1 Code section and 9 other regulations
- Regulations
- 1 issued under this section
Tax liability incurred to the Virgin Islands pursuant to this subtitle, as made applicable in the Virgin Islands by the Act entitled “An Act making appropriations for the naval service for the fiscal year ending June 30, 1922, and for other purposes”, approved July 12, 1921 (48 U.S.C. 1397), or pursuant to section 28(a) of the Revised Organic Act of the Virgin Islands, approved July 22, 1954 (48 U.S.C. 1642), shall not be reduced or remitted in any way, directly or indirectly, whether by grant, subsidy, or other similar payment, by any law enacted in the Virgin Islands, except to the extent provided in subsection (b).
Except as provided in paragraph (2), subsection (a) shall not apply with respect to so much of the tax liability referred to in subsection (a) as is attributable to income derived from sources within the Virgin Islands or income effectively connected with the conduct of a trade or business within the Virgin Islands.
Paragraph (1) shall not apply to any liability payable to the Virgin Islands under section 932(b).
In the case of a qualified foreign corporation, subsection (a) shall not apply with respect to so much of the tax liability referred to in subsection (a) as is attributable to income which is derived from sources outside the United States and which is not effectively connected with the conduct of a trade or business within the United States.
The determination as to whether income is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall be made under regulations prescribed by the Secretary.
(Added Pub. L. 86–779, § 4(a)(1), Sept. 14, 1960, 74 Stat. 998; amended Pub. L. 94–455, title XIX, §§ 1901(a)(118), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1784, 1834; Pub. L. 97–248, title II, § 213(b), Sept. 3, 1982, 96 Stat. 463; Pub. L. 97–455, § 1(c), Jan. 12, 1983, 96 Stat. 2498; Pub. L. 98–369, div. A, title VIII, § 801(d)(7), July 18, 1984, 98 Stat. 996; Pub. L. 99–514, title XII, § 1275(a)(2)(A), (c)(1), (2), title XVIII, § 1876(f)(2), Oct. 22, 1986, 100 Stat. 2598, 2900; Pub. L. 108–357, title VIII, § 908(c)(3), Oct. 22, 2004, 118 Stat. 1656.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
Regulations under this section
Treasury regulations (26 CFR) issued under § 934
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 2 other sections
- § 932(b) Coordination of United States and Virgin Islands income taxes
- § 958 Rules for determining stock ownership
Cited by 1 Code section
Cited in 9 regulations not issued under it
- § 1.28-0 Credit for clinical testing expenses for certain drugs for rare diseases or conditions; table of contents.
- § 1.28-1 Credit for clinical testing expenses for certain drugs for rare diseases or conditions.
- § 1.861-8 Computation of taxable income from sources within the United States and from other sources and activities.
- § 1.932-1 Coordination of United States and Virgin Islands income taxes.
- § 1.936-4 Intangible property income in the absence of an election out.
- § 1.936-5 Intangible property income when an election out is made: Product, business presence, and contract manufacturing.
- § 1.936-6 Intangible property income when an election out is made: Cost sharing and profit split options; covered intangibles.
- § 1.936-7 Manner of making election under section 936 (h)(5); special election for export sales; revocation of election under section 936(a).
- § 1.937-3 Income effectively connected with the conduct of a trade or business in a possession.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 108–357Parts changed in 2004: (b)(4)
- Amended by Pub. L. 99–514Parts changed in 1986: (a) (b) (c) (d) (e) (f)
- Amended by Pub. L. 98–369Parts changed in 1984: (f)
- Amended by Pub. L. 97–455Parts changed in 1983: (a)
- Amended by Pub. L. 97–248Parts changed in 1982: (b)(2) (e) (f)
- Amended by Pub. L. 94–455Parts changed in 1976: (b) (d)
- Added by Pub. L. 86–779
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 III INCOME FROM SOURCES WITHOUT THE UNITED STATES
- Subpart D Possessions of the United States
Nearby sections
- § 931 Income from sources within Guam, American Samoa, or the Northern Mariana Islands
- § 932 Coordination of United States and Virgin Islands income taxes
- § 933 Income from sources within Puerto Rico
- § 934 Limitation on reduction in income tax liability incurred to the Virgin Islands
- § 934A Repealed
- § 935 Repealed
- § 936 Repealed
- § 937 Residence and source rules involving possessions
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2004—Subsec. (b)(4). Pub. L. 108–357 struck out “the Virgin Islands or” before “the United States” in two places.
1986—Subsec. (a). Pub. L. 99–514, § 1275(c)(2)(A), struck out “or (c) or in section 934A” after “subsection (b)”.
Subsec. (b). Pub. L. 99–514, § 1275(c)(1), (2)(B), added subsec. (b) and struck out former subsec. (b) which excepted from subsec. (a) domestic or Virgin Islands corporations to the extent they derived income from sources without the United States under certain conditions.
Subsec. (c). Pub. L. 99–514, § 1275(c)(1), struck out subsec. (c) which provided an exception to subsec. (a) of this section for individual citizens of the United States residing in the Virgin Islands to the extent their income is derived from sources within the Virgin Islands.
Subsec. (d). Pub. L. 99–514, § 1275(c)(1), struck out subsec. (d) which related to requirement to supply information.
Subsec. (e). Pub. L. 99–514, § 1275(a)(2)(A), struck out subsec. (e) which provided for tax treatment of intangible property income of certain domestic corporations.
Subsec. (f). Pub. L. 99–514, § 1275(a)(2)(A), struck out subsec. (f) which provided a transitional rule for applying subsec. (b)(2) of this section with respect to taxable years beginning after Dec. 31, 1982, and before Jan. 1, 1985.
Pub. L. 99–514, § 1876(f)(2), struck out subsec. (f) which provided that subsec. (a) of this section not apply in the case of a Virgin Islands corporation which is a FSC.
1984—Subsec. (f). Pub. L. 98–369 added subsec. (f) relating to FSC.
1983—Subsec. (a). Pub. L. 97–455 inserted “or in section 934A” after “subsection (b) or (c)”.
1982—Subsec. (b)(2). Pub. L. 97–248, § 213(b)(1), substituted “65 percent” for “50 percent”.
Subsec. (e). Pub. L. 97–248, § 213(b)(2), added subsec. (e).
Subsec. (f). Pub. L. 97–248, § 213(b)(2), added a temporary subsec. (f) which provided that in applying subsec. (b)(2) with respect to taxable years beginning after December 31, 1982, and before January 1, 1985, “55 percent” shall be substituted for “65 percent” for taxable years beginning in calendar year 1983 and “60 percent” shall be substituted for “65 percent” for taxable years beginning in calendar year 1984.
1976—Subsec. (b). Pub. L. 94–455, § 1901(a)(118), struck out “For the purposes of this subsection, all amounts received by such corporation within the United States, whether derived from sources within or without the United States, shall be considered as being derived from sources within the United States”.
Subsec. (d). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary” in two places.
Statutory Notes and Related Subsidiaries
Effective Date of 2004 Amendment
Amendment by Pub. L. 108–357 applicable to taxable years ending after Oct. 22, 2004, see section 908(d)(1) of Pub. L. 108–357, set out as an Effective Date note under section 937 of this title.
Effective Date of 1986 Amendment
Amendment by section 1275(a)(2)(A), (c)(1), (2) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1277 of Pub. L. 99–514, set out as a note under section 931 of this title.
Amendment by section 1876(f)(2) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–369 applicable to transactions after Dec. 31, 1984, in taxable years ending after such date, see section 805(a)(1) of Pub. L. 98–369, as amended, set out as a note under section 245 of this title.
Effective Date of 1983 Amendment
Pub. L. 97–455, § 1(e), Jan. 12, 1983, 96 Stat. 2498, provided that:
“(1) In general.— Except as provided in paragraph (2), the amendments made by this section [enacting section 934A and amending this section] shall apply to amounts received after the date of the enactment of this Act [Jan. 12, 1983] in taxable years ending after such date.“(2) Withholding.— The amendment made by subsection (b) [enacting section 1444 of this title] shall apply to payments made after the date of the enactment of this Act.”
Effective Date of 1982 Amendment
Amendment by Pub. L. 97–248 applicable to taxable years beginning after Dec. 31, 1982, except that so much of this section to which former section 936(h)(6) applied by reason of subsec. (e)(4) of this section was applicable to taxable years ending after July 1, 1982, see section 213(e)(1), (2) of Pub. L. 97–248 set out as a note under section 246 of this title.
Effective Date of 1976 Amendment
Amendment by section 1901(a)(118) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
Effective Date
Pub. L. 86–779, § 4(e)(1), Sept. 14, 1960, 74 Stat. 1000, provided that: “The amendments made by subsection (a) [enacting this section] shall apply to tax liability incurred with respect to taxable years beginning on or after January 1, 1960.”
Plan Amendments Not Required Until January 1, 1989
For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.