Internal Revenue Code · 26 U.S.C.
§ 957. Controlled foreign corporations; United States persons
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. § 957
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
- March 23, 2018 by Pub. L. 115–141
- Amendments
- 5 dated changes in the source credit
- Length
- 3 subsections · 596 words · about 3 min to read
- Defines
- 3 terms
- Cross-references
- cites 4; cited by 26 Code sections and 99 other regulations
- Regulations
- 3 issued under this section
For purposes only of taking into account income described in section 953(a) (relating to insurance income), the term “controlled foreign corporation” includes not only a foreign corporation as defined by subsection (a) but also one of which more than 25 percent of the total combined voting power of all classes of stock (or more than 25 percent of the total value of stock) is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such corporation, if the gross amount of premiums or other consideration in respect of the reinsurance or the issuing of insurance or annuity contracts not described in section 953(e)(2) exceeds 75 percent of the gross amount of all premiums or other consideration in respect of all risks.
(Added Pub. L. 87–834, § 12(a), Oct. 16, 1962, 76 Stat. 1017; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99–514, title XII, §§ 1221(b)(3)(C), 1222(a), 1224(a), 1273(a), Oct. 22, 1986, 100 Stat. 2553, 2556, 2558, 2595; Pub. L. 108–357, title VIII, § 908(c)(5), Oct. 22, 2004, 118 Stat. 1656; Pub. L. 115–97, title I, § 14101(e)(2), Dec. 22, 2017, 131 Stat. 2192; Pub. L. 115–141, div. U, title IV, § 401(a)(164), Mar. 23, 2018, 132 Stat. 1192.)
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 § 957
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 4 other sections
- § 958(a) Rules for determining stock ownership
- § 953(a) Insurance income
- § 7701(a)(30) Definitions
- § 933(1) Income from sources within Puerto Rico
Cited by 26 Code sections
- § 163(e)(3)(B)(i) Interest
- § 267(a)(3)(B)(i) Losses, expenses, and interest with respect to transactions between related taxpayers
- § 304(b)(5)(B)(ii) Redemption through use of related corporations
- § 312(m) Effect on earnings and profits
- § 332(d)(3) Complete liquidations of subsidiaries
- § 543(a)(1)(C) Personal holding company income
- § 672(f)(3)(A) Definitions and rules
- § 679(c)(2)(A) Foreign trusts having one or more United States beneficiaries
- § 864(d)(6) Definitions and special rules
- § 877(d)(4)(B)(i) Expatriation to avoid tax
- § 881(c)(5)(B) Tax on income of foreign corporations not connected with United States business
- § 883(c)(2) Exclusions from gross income
- § 901(g)(2) Taxes of foreign countries and of possessions of United States
- § 904(d)(5)(A) Limitation on credit
- § 937(a) Residence and source rules involving possessions
- § 951(b) Amounts included in gross income of United States shareholders
- § 951B(a)(1) Amounts included in gross income of foreign controlled United States shareholders
- § 953(c)(1)(A) Insurance income
- § 958(b) Rules for determining stock ownership
- § 970(a)(1) Reduction of subpart F income of export trade corporations
- § 971(a)(1) Definitions
- § 1248(a)(2) Gain from certain sales or exchanges of stock in certain foreign corporations
- § 1291(d)(2)(B)(i)(III) Interest on tax deferral
- § 1293(c) Current taxation of income from qualified electing funds
Cited in 99 regulations not issued under it
- § 1.163-5 Denial of interest deduction on certain obligations issued after December 31, 1982, unless issued in registered form.
- § 1.163-12 Deduction of original issue discount on instrument held by related foreign person.
- § 1.163(j)-1 Definitions.
- § 1.250(b)-1 Computation of foreign-derived intangible income (FDII).
- § 1.302-2 Redemptions not taxable as dividends.
- § 1.302-4 Termination of shareholder's interest.
- § 1.304-7 Certain acquisitions by foreign acquiring corporations.
- § 1.331-1 Corporate liquidations.
- § 1.332-6 Records to be kept and information to be filed with return.
- § 1.332-8 Recognition of gain on liquidation of certain holding companies.
- § 1.334-1 Basis of property received in liquidations.
- § 1.338-2 Nomenclature and definitions; mechanics of the section 338 election.
- § 1.338-9 International aspects of section 338.
- § 1.351-3 Records to be kept and information to be filed.
- § 1.355-5 Records to be kept and information to be filed.
- § 1.362-3 Basis of importation property acquired in loss importation transaction.
- § 1.362-4 Basis of loss duplication property.
- § 1.367(a)-3 Treatment of transfers of stock or securities to foreign corporations.
- § 1.367(a)-8 Gain recognition agreement requirements.
- § 1.367(b)-2 Definitions and special rules.
- § 1.367(b)-4 Acquisition of foreign corporate stock or assets by a foreign corporation in certain nonrecognition transactions.
- § 1.368-3 Records to be kept and information to be filed with returns.
- § 1.381(b)-1 Operating rules applicable to carryovers in certain corporate acquisitions.
- § 1.382-8 Controlled groups.
Show 75 more
- § 1.385-3 Certain distributions of debt instruments and similar transactions.
- § 1.441-2 Election of taxable year consisting of 52-53 weeks.
- § 1.469-2T Passive activity loss (temporary).
- § 1.562-1 Dividends for which the dividends paid deduction is allowable.
- § 1.638-1 Continental Shelf areas.
- § 1.672(f)-2 Certain foreign corporations.
- § 1.679-2 Trusts treated as having a U.S. beneficiary.
- § 1.701-2 Anti-abuse rule.
- § 1.702-1 Income and credits of partner.
- § 1.704-1 Partner's distributive share.
- § 1.704-3 Contributed property.
- § 1.706-1 Taxable years of partner and partnership.
- § 1.861-10 Special allocations of interest expense.
- § 1.861-12 Characterization rules and adjustments for certain assets.
- § 1.861-12T Characterization rules and adjustments for certain assets (temporary).
- § 1.863-8 Source of income derived from space and ocean activity under section 863(d).
- § 1.863-9 Source of income derived from communications activity under section 863(a), (d), and (e).
- § 1.864-5 Foreign source income effectively connected with U.S. business.
- § 1.864-6 Income, gain, or loss attributable to an office or other fixed place of business in the United States.
- § 1.864-8T Treatment of related person factoring income (temporary).
- § 1.871-14 Rules relating to repeal of tax on interest of nonresident alien individuals and foreign corporations received from certain portfolio debt investments.
- § 1.883-3 Treatment of controlled foreign corporations.
- § 1.901-2 Income, war profits, or excess profits tax paid or accrued.
- § 1.901(m)-1 Definitions.
- § 1.902-1 Credit for domestic corporate shareholder of a foreign corporation for foreign income taxes paid by the foreign 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.
- § 1.937-1 Bona fide residency in a possession.
- § 1.937-2 Income from sources within a possession.
- § 1.951-1 Amounts included in gross income of United States shareholders.
- § 1.951-3 Coordination of subpart F with foreign personal holding company provisions.
- § 1.951A-1 General provisions.
- § 1.951A-2 Tested income and tested loss.
- § 1.952-1 Subpart F income defined.
- § 1.953-1 Income from insurance of United States risks.
- § 1.954-2 Foreign personal holding company income.
- § 1.956-2 Definition of United States property.
- § 1.956-2T Definition of United States Property (temporary).
- § 1.958-1 Direct and indirect ownership of stock.
- § 1.960-1 Overview, definitions, and computational rules for determining foreign income taxes deemed paid under section 960(a), (b), and (d).
- § 1.964-1 Determination of the earnings and profits of a foreign corporation.
- § 1.965-8 Affiliated groups (including consolidated groups).
- § 1.985-1 Functional currency.
- § 1.985-2 Election to use the United States dollar as the functional currency of a QBU.
- § 1.985-3 United States dollar approximate separate transactions method.
- § 1.985-5 Adjustments required upon change in functional currency.
- § 1.985-6 Transition rules for a QBU that uses the dollar approximate separate transactions method for its first taxable year beginning in 1987.
- § 1.985-7 Adjustments required in connection with a change to DASTM.
- § 1.985-8 Special rules applicable to the European Monetary Union (conversion to euro).
- § 1.987-1 Scope, definitions, and special rules.
- § 1.987-1T Scope, definitions, and special rules (temporary).
- § 1.1081-11 Records to be kept and information to be filed with returns.
- § 1.1248-1 Treatment of gain from certain sales or exchanges of stock in certain foreign corporations.
- § 1.1291-1 Taxation of U.S. persons that are shareholders of section 1291 funds.
- § 1.1291-9 Deemed dividend election.
- § 1.1297-1 Definition of passive foreign investment company.
- § 1.1297-2 Special rules regarding look-through subsidiaries and look-through partnerships.
- § 1.1297-3 Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a section 1297(e) PFIC.
- § 1.1298-2 Rules for certain corporations changing businesses.
- § 1.1298-3 Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC.
- § 1.1411-10 Controlled foreign corporations and passive foreign investment companies.
- § 1.1471-5 Definitions applicable to section 1471.
- § 1.1502-80 Applicability of other provisions of law.
- § 1.6011-4 Requirement of statement disclosing participation in certain transactions by taxpayers.
- § 1.6038-5 Information returns required of certain United States persons to report amounts determined with respect to certain foreign corporations for global intangible low-taxed income (GILTI) purposes.
- § 1.6041-1 Return of information as to payments of $600 or more.
- § 1.6049-5 Interest and original issue discount subject to reporting after December 31, 1982.
- § 1.6050H-1 Information reporting of mortgage interest received in a trade or business from an individual.
- § 1.6050S-3 Information reporting for payments of interest on qualified education loans.
- § 1.7701(l)-3 Recharacterizing financing arrangements involving fast-pay stock.
- § 1.7874-11 Rules regarding inversion gain.
- § 4.954-1 Foreign base company income; taxable years beginning after December 31, 1986.
- § 20.2107-1 Expatriation to avoid tax.
- § 301.6114-1 Treaty-based return positions.
- § 301.7701(b)-7 Coordination with income tax treaties.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 115–141Parts changed in 2018: (b)
- Amended by Pub. L. 115–97Parts changed in 2017: (a)
- Amended by Pub. L. 108–357Parts changed in 2004: (c) (c)(2)(B)
- Amended by Pub. L. 99–514Parts changed in 1986: (a) (b) (c) (d)
- Amended by Pub. L. 94–455Parts changed in 1976: (c)
- Added by Pub. L. 87–834
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 F Controlled Foreign Corporations
Nearby sections
- § 954 Foreign base company income
- § 955 Repealed
- § 956 Investment of earnings in United States property
- § 956A Repealed
- § 957 Controlled foreign corporations; United States persons
- § 958 Rules for determining stock ownership
- § 959 Exclusion from gross income of previously taxed earnings and profits
- § 960 Deemed paid credit for subpart F inclusions
- § 961 Adjustments to basis of stock in controlled foreign corporations and of other property
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
2018—Subsec. (b). Pub. L. 115–141 substituted “contracts not described in section 953(e)(2)” for “contracts described in section 953(a)(1)”.
2017—Subsec. (a). Pub. L. 115–97 substituted “title” for “subpart” in introductory provisions.
2004—Subsec. (c). Pub. L. 108–357, § 908(c)(5)(B), struck out “derived from sources within a possession, was effectively connected with the conduct of a trade or business within a possession, or” after “whether income was” in concluding provisions.
Subsec. (c)(2)(B). Pub. L. 108–357, § 908(c)(5)(A), substituted “active conduct of a” for “conduct of an active”.
1986—Subsec. (a). Pub. L. 99–514, § 1222(a)(1), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “For purposes of this subpart, the term ‘controlled foreign corporation’ means any foreign corporation of which more than 50 percent of the total combined voting power of all classes of stock entitled to vote is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation.”
Subsec. (b). Pub. L. 99–514, § 1222(a)(2), inserted “(or more than 25 percent of the total value of stock)”.
Pub. L. 99–514, § 1221(b)(3)(C), substituted “insurance income” for “income derived from insurance of United States risks”.
Subsec. (c). Pub. L. 99–514, § 1273(a), added par. (2) and concluding provisions and struck out former pars. (2) and (3) which read as follows:
“(2) with respect to a corporation organized under the laws of the Virgin Islands, such term does not include an individual who is a bona fide resident of the Virgin Islands and whose income tax obligation under this subtitle for the taxable year is satisfied pursuant to section 28(a) of the Revised Organic Act of the Virgin Islands, approved July 22, 1954 (48 U.S.C. 1642), by paying tax on income derived from all sources both within and outside the Virgin Islands into the treasury of the Virgin Islands, and
“(3) with respect to a corporation organized under the laws of any other possession of the United States, such term does not include an individual who is a bona fide resident of any such other possession and whose income derived from sources within possessions of the United States is not, by reason of section 931(a), includible in gross income under this subtitle for the taxable year.”
Pub. L. 99–514, § 1224(a), redesignated subsec. (d) as (c) and struck out former subsec. (c) which provided circumstances under which for purposes of this subpart, the term “controlled foreign corporation” would not include certain corporations created or organized in Puerto Rico or a possession of the United States or under the laws of Puerto Rico or a possession of the United States.
Subsec. (d). Pub. L. 99–514, § 1224(a), redesignated subsec. (d) as (c).
1976—Subsec. (c) Pub. L. 94–455 struck out “or his delegate” after “Secretary”.
Statutory Notes and Related Subsidiaries
Effective Date of 2017 Amendment
Amendment by Pub. L. 115–97 applicable to distributions made after Dec. 31, 2017, see section 14101(f) of Pub. L. 115–97, set out as an Effective Date note under section 245A of this title.
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 1221(b)(3)(C) of Pub. L. 99–514 applicable to taxable years of foreign corporations beginning after Dec. 31, 1986, except as otherwise provided, see section 1221(g) of Pub. L. 99–514, set out as a note under section 954 of this title.
Pub. L. 99–514, title XII, § 1222(c), Oct. 22, 1986, 100 Stat. 2557, provided that:
“(1) In general.— The amendments made by this section [amending this section and section 552 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 1986; except that for purposes of applying sections 951(a)(1)(B) and 956 of the Internal Revenue Code of 1986, such amendments shall take effect on August 16, 1986.“(2) Transitional rule.— In the case of any corporation treated as a controlled foreign corporation by reason of the amendments made by this section, property acquired before August 16, 1986, shall not be taken into account under section 956(b) of the Internal Revenue Code of 1986.“(3) Special rule for beneficiary of trust.— In the case of an individual—“(A) who is a beneficiary of a trust which was established on December 7, 1979, under the laws of a foreign jurisdiction, and“(B) who was not a citizen or resident of the United States on the date the trust was established,amounts which are included in the gross income of such beneficiary under section 951(a) of the Internal Revenue Code of 1986 with respect to stock held by the trust (and treated as distributed to the trust) shall be treated as the first amounts which are distributed by the trust to such beneficiary and as amounts to which section 959(a) of such Code applies.”
Pub. L. 99–514, title XII, § 1224(b), Oct. 22, 1986, 100 Stat. 2558, provided that:
“(1) In general.— The amendment made by subsection (a) [amending this section] shall apply to taxable years of foreign corporations beginning after December 31, 1986; except that for purposes of applying sections 951(a)(1)(B) and 956 of the Internal Revenue Code of 1986, such amendments shall take effect on August 16, 1986.“(2) Transitional rule.— In the case of any corporation treated as a controlled foreign corporation by reason of the amendment made by subsection (a), property acquired before August 16, 1986, shall not be taken into account under section 956(b) of the Internal Revenue Code of 1986.”
Amendment by section 1273(a) 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.