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26 U.S.C. § 1293 — Current taxation of income from qualified electing funds
Federal law — U.S. Code and appendices · legal_authorities
**(a) Inclusion**
(1) **In general** — Every United States person who owns (or is treated under section 1298(a) as owning) stock of a qualified electing fund at any time during the taxable year of such fund shall include in gross income—
(A) as ordinary income, such shareholder’s pro rata share of the ordinary earnings of such fund for such year, and
(B) as long-term capital gain, such shareholder’s pro rata share of the net capital gain of such fund for such year.
(2) **Year of inclusion** — The inclusion under paragraph (1) shall be for the taxable year of the shareholder in which or with which the taxable year of the fund ends.
**(b) Pro rata share** The pro rata share referred to in subsection (a) in the case of any shareholder is the amount which would have been distributed with respect to the shareholder’s stock if, on each day during the taxable year of the fund, the fund had distributed to each shareholder a pro rata share of that day’s ratable share of the fund’s ordinary earnings and net capital gain for such year. To the extent provided in regulations, if the fund establishes to the satisfaction of the Secretary that it uses a shorter period than the taxable year to determine shareholders’ interests in the earnings of such fund, pro rata shares may be determined by using such shorter period.
**(c) Previously taxed amounts distributed tax free** If the taxpayer establishes to the satisfaction of the Secretary that any amount distributed by a passive foreign investment company is paid out of earnings and profits of the company which were included under subsection (a) in the income of any United States person, such amount shall be treated, for purposes of this chapter, as a distribution which is not a dividend; except that such distribution shall immed
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Source location: Title 26, Chapter 1, § 1293; chapter-001-normal-taxes-and-surtaxes.md
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**(a) Inclusion**
(1) **In general** — Every United States person who owns (or is treated under section 1298(a) as owning) stock of a qualified electing fund at any time during the taxable year of such fund shall include in gross income—
(A) as ordinary income, such shareholder’s pro rata share of the ordinary earnings of such fund for such year, and
(B) as long-term capital gain, such shareholder’s pro rata share of the net capital gain of such fund for such year.
(2) **Year of inclusion** — The inclusion under paragraph (1) shall be for the taxable year of the shareholder in which or with which the taxable year of the fund ends.
**(b) Pro rata share** The pro rata share referred to in subsection (a) in the case of any shareholder is the amount which would have been distributed with respect to the shareholder’s stock if, on each day during the taxable year of the fund, the fund had distributed to each shareholder a pro rata share of that day’s ratable share of the fund’s ordinary earnings and net capital gain for such year. To the extent provided in regulations, if the fund establishes to the satisfaction of the Secretary that it uses a shorter period than the taxable year to determine shareholders’ interests in the earnings of such fund, pro rata shares may be determined by using such shorter period.
**(c) Previously taxed amounts distributed tax free** If the taxpayer establishes to the satisfaction of the Secretary that any amount distributed by a passive foreign investment company is paid out of earnings and profits of the company which were included under subsection (a) in the income of any United States person, such amount shall be treated, for purposes of this chapter, as a distribution which is not a dividend; except that such distribution shall immediately reduce earnings and profits. If the passive foreign investment company is a controlled foreign corporation (as defined in section 957(a)), the preceding sentence shall not apply to any United States shareholder (as defined in section 951(b)) in such corporation, and, in applying section 959 to any such shareholder, any inclusion under this section shall be treated as an inclusion under section 951(a)(1)(A).
**(d) Basis adjustments** The basis of the taxpayer’s stock in a passive foreign investment company shall be—
(1) increased by any amount which is included in the income of the taxpayer under subsection (a) with respect to such stock, and
(2) decreased by any amount distributed with respect to such stock which is not includible in the income of the taxpayer by reason of subsection (c).
A similar rule shall apply also in the case of any property if by reason of holding such property the taxpayer is treated under section 1298(a) as owning stock in a qualified electing fund.
**(e) Ordinary earnings** For purposes of this section—
(1) **Ordinary earnings** — The term “ordinary earnings” means the excess of the earnings and profits of the qualified electing fund for the taxable year over its net capital gain for such taxable year.
(2) **Limitation on net capital gain** — A qualified electing fund’s net capital gain for any taxable year shall not exceed its earnings and profits for such taxable year.
(3) **Determination of earnings and profits** — The earnings and profits of any qualified electing fund shall be determined without regard to paragraphs (4), (5), and (6) of section 312(n). Under regulations, the preceding sentence shall not apply to the extent it would increase earnings and profits by an amount which was previously distributed by the qualified electing fund.
**(f) Foreign tax credit allowed in the case of 10-percent corporate shareholder** For purposes of section 960—
(1) any amount included in the gross income under subsection (a) shall be treated as if it were included under section 951(a),
(2) any amount excluded from gross income under subsection (c) shall be treated in the same manner as amounts excluded from gross income under section 959, and
(3) a domestic corporation which owns (or is treated under section 1298(a) as owning) stock of a qualified electing fund shall be treated in the same manner as a United States shareholder of a controlled foreign corporation (and such qualified electing fund shall be treated in the same manner as such controlled foreign corporation) if such domestic corporation meets the stock ownership requirements of subsection (a) or (b) of section 902 (as in effect before its repeal) with respect to such qualified electing fund.
**(g) Other special rules**
(1) **Exception for certain income** — For purposes of determining the amount included in the gross income of any person under this section, the ordinary earnings and net capital gain of a qualified electing fund shall not include any item of income received by such fund if—
(A) such fund is a controlled foreign corporation (as defined in section 957(a)) and such person is a United States shareholder (as defined in section 951(b)) in such fund, and
(B) such person establishes to the satisfaction of the Secretary that—
(i) such income was subject to an effective rate of income tax imposed by a foreign country greater than 90 percent of the maximum rate of tax specified in section 11, or
(ii) such income is—
(I) from sources within the United States,
(II) effectively connected with the conduct by the qualified electing fund of a trade or business in the United States, and
(III) not exempt from taxation (or subject to a reduced rate of tax) pursuant to a treaty obligation of the United States.
(2) **Prevention of double inclusion** — The Secretary shall prescribe such adjustment to the provisions of this section as may be necessary to prevent the same item of income of a qualified electing fund from being included in the gross income of a United States person more than once.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) General rule** The accumulated earnings tax imposed by section 531 shall apply to every corporation (other than those described in subsection (b)) formed or availed of for the purpose of avoiding the income tax with respect to its shareholders or the shareholders of any other corporation, by permitting earnings and profits to accumulate instead of being divided or distributed.
**(b) Exceptions** The accumulated earnings tax imposed by section 531 shall not apply to—
(1) a personal holding company (as defined in section 542),
(2) a corporation exempt from tax under subchapter F (section 501 and following), or
(3) a passive foreign investment company (as defined in section 1297).
**(c) Application determined without regard to number of shareholders** The application of this part to a corporation shall be determined without regard to the number of shareholders of such corporation.
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 532
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Federal law — U.S. Code and appendices · legal_authorities
### Statutory Notes
Section, act Aug. 16, 1954, ch. 736, 68A Stat. 286; Pub. L. 86–780, § 6(b)(2), Sept. 14, 1960, 74 Stat. 1016; Pub. L. 87–834, § 9(a), Oct. 16, 1962, 76 Stat. 999; Pub. L. 91–684, §§ 1, 2, Jan. 12, 1971, 84 Stat. 2068, 2069; Pub. L. 94–12, title VI, § 602(c)(6), Mar. 29, 1975, 89 Stat. 59; Pub. L. 94–455, title X, § 1033(a), Oct. 4, 1976, 90 Stat. 1626; Pub. L. 99–514, title XII, § 1202(a), Oct. 22, 1986, 100 Stat. 2528; Pub. L. 100–647, title I, § 1012(b)(1), (2), Nov. 10, 1988, 102 Stat. 3496; Pub. L. 105–34, title XI, §§ 1113(a), 1163(a), Aug. 5, 1997, 111 Stat. 970, 987; Pub. L. 108–357, title IV, § 405(a), Oct. 22, 2004, 118 Stat. 1498, related to deemed paid credit where domestic corporation owns 10 percent or more of voting stock of foreign corporation.
#### Effective Date of Repeal
Repeal 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 an Effective Date of 2017 Amendment note under [section 78 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section78&num=0&edition=prelim).
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 902
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Treatment of distributions and stock dispositions**
(1) **Distributions** — If a United States person receives an excess distribution in respect of stock in a passive foreign investment company, then—
(A) the amount of the excess distribution shall be allocated ratably to each day in the taxpayer’s holding period for the stock,
(B) with respect to such excess distribution, the taxpayer’s gross income for the current year shall include (as ordinary income) only the amounts allocated under subparagraph (A) to—
(i) the current year, or
(ii) any period in the taxpayer’s holding period before the 1st day of the 1st taxable year of the company which begins after December 31, 1986, and for which it was a passive foreign investment company, and
(C) the tax imposed by this chapter for the current year shall be increased by the deferred tax amount (determined under subsection (c)).
(2) **Dispositions** — If the taxpayer disposes of stock in a passive foreign investment company, then the rules of paragraph (1) shall apply to any gain recognized on such disposition in the same manner as if such gain were an excess distribution.
(3) **Definitions** — For purposes of this section—
(A) *Holding period* — The taxpayer’s holding period shall be determined under section 1223; except that—
(i) for purposes of applying this section to an excess distribution, such holding period shall be treated as ending on the date of such distribution, and
(ii) if section 1296 applied to such stock with respect to the taxpayer for any prior taxable year, such holding period shall be treated as beginning on the first day of the first taxable year beginning after the last taxable year for which section 1296 so applied.
(B) *Current year* — The term “current year”
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1291
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Married individuals filing joint returns and surviving spouses** There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2(a)),
a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $36,90015% of taxable income. Over $36,900 but not over $89,150$5,535, plus 28% of the excess over $36,900. Over $89,150 but not over $140,000$20,165, plus 31% of the excess over $89,150. Over $140,000 but not over $250,000$35,928.50, plus 36% of the excess over $140,000. Over $250,000$75,528.50, plus 39.6% of the excess over $250,000.
**(b) Heads of households** There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $29,60015% of taxable income. Over $29,600 but not over $76,400$4,440, plus 28% of the excess over $29,600. Over $76,400 but not over $127,500$17,544, plus 31% of the excess over $76,400. Over $127,500 but not over $250,000$33,385, plus 36% of the excess over $127,500. Over $250,000$77,485, plus 39.6% of the excess over $250,000.
**(c) Unmarried individuals (other than surviving spouses and heads of households)** There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is:The tax is: Not over $22,10015% of taxable income. Over $22,100 but not over $53,50
Source: Supplied U.S. Code snapshot — release unconfirmed · 26 U.S.C. § 1
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Amounts included**
(1) **In general** — If a foreign corporation is a controlled foreign corporation at any time during a taxable year of the foreign corporation (in this subsection referred to as the “CFC year”)—
(A) each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder’s pro rata share (determined under paragraph (2)) of the corporation’s subpart F income for the CFC year, and
(B) each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on the last day, in the CFC year, on which such corporation is a controlled foreign corporation shall include in gross income the amount determined under section 956 with respect to such shareholder for the CFC year (but only to the extent not excluded from gross income under section 959(a)(2)).
(2) **Pro rata share of subpart F income** — A United States shareholder’s pro rata share of a controlled foreign corporation’s subpart F income for a CFC year shall be the portion of such income which is attributable to—
(A) the stock of such corporation owned (within the meaning of section 958(a)) by such shareholder, and
(B) any period of the CFC year during which—
(i) such shareholder owned (within the meaning of section 958(a)) such stock,
(ii) such shareholder was a United States shareholder of such corporation, and
(iii) such corporation was a controlled foreign corporation.
(3) **Taxable year of inclusion** — Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder’s taxable year which includes the l
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Federal law — U.S. Code and appendices · legal_authorities
If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under subsections (a) and (d) of section 960 (determined without regard to the phrase “90 percent of” in subsection (d)(1) thereof) for such taxable year shall be treated for purposes of this title (other than sections 245 and 245A) as a dividend received by such domestic corporation from the foreign corporation.
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Federal law — U.S. Code and appendices · legal_authorities
Page 2410
TITLE 26—INTERNAL REVENUE CODE
§ 1293
‘‘Nonrecognition provisions’’, read as follows: ‘‘To the
extent provided in regulations, gain shall be recognized
on any disposition of stock in a passive foreign invest-
ment company.’’
Subsec. (g). Pub. L. 100–647, § 1012(p)(7)(B), added sub-
sec. (g).
Statutory Notes and Related Subsidiaries
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 OF 2010 AMENDMENT
Amendment by Pub. L. 111–312 applicable to estates
of decedents dying, and transfers made after Dec. 31,
2009, except as otherwise provided, see section 301(e) of
Pub. L. 111–312, set out as an Effective and Termination
Dates of 2010 Amendment note under section 121 of this
title.
Pub. L. 111–147, title V, § 521(c), Mar. 18, 2010, 124 Stat.
112, provided that: ‘‘The amendments made by this sec-
tion [amending this section and section 1298 of this
title] take effect on the date of the enactment of this
Act [Mar. 18, 2010].’’
EFFECTIVE DATE OF 2004 AMENDMENT
Amendment by Pub. L. 108–357 applicable to taxable
years of foreign corporations beginning after Dec. 31,
2004, and to taxable years of United States shareholders
with or within which such taxable years of foreign cor-
porations end, see section 413(d)(1) of Pub. L. 108–357,
set out as an Effective and Termination Dates of 2004
Amendments note under section 1 of this title.
EFFECTIVE DATE OF 2001 AMENDMENT
Amendment by Pub. L. 107–16 applicable to estates of
decedents dy
Source: Supplied 2024 U.S. Code historical extraction · 26 U.S.C. § 1293
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