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26 U.S.C. § 6038 — Information reporting with respect to certain foreign corporations and partnerships
Federal law — U.S. Code and appendices · legal_authorities
**(a) Requirement**
(1) **In general** — Every United States person shall furnish, with respect to any foreign business entity which such person controls, such information as the Secretary may prescribe relating to—
(A) the name, the principal place of business, and the nature of business of such entity, and the country under whose laws such entity is incorporated (or organized in the case of a partnership);
(B) in the case of a foreign corporation, its post-1986 undistributed earnings (as defined in section 902(c)); 11 See References in Text note below.
(C) a balance sheet for such entity listing assets, liabilities, and capital;
(D) transactions between such entity and—
(i) such person,
(ii) any corporation or partnership which such person controls, and
(iii) any United States person owning, at the time the transaction takes place—
(I) in the case of a foreign corporation, 10 percent or more of the value of any class of stock outstanding of such corporation, and
(II) in the case of a foreign partnership, at least a 10-percent interest in such partnership; and
(E)
(i) in the case of a foreign corporation, a description of the various classes of stock outstanding, and a list showing the name and address of, and number of shares held by, each United States person who is a shareholder of record owning at any time during the annual accounting period 5 percent or more in value of any class of stock outstanding of such foreign corporation, and
(ii) information comparable to the information described in clause (i) in the case of a foreign partnership.
The Secretary may also require the furnishing of any other information which is similar or related in nature to that specified in the preceding sentence or which the Secre
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**(a) Requirement**
(1) **In general** — Every United States person shall furnish, with respect to any foreign business entity which such person controls, such information as the Secretary may prescribe relating to—
(A) the name, the principal place of business, and the nature of business of such entity, and the country under whose laws such entity is incorporated (or organized in the case of a partnership);
(B) in the case of a foreign corporation, its post-1986 undistributed earnings (as defined in section 902(c)); 11 See References in Text note below.
(C) a balance sheet for such entity listing assets, liabilities, and capital;
(D) transactions between such entity and—
(i) such person,
(ii) any corporation or partnership which such person controls, and
(iii) any United States person owning, at the time the transaction takes place—
(I) in the case of a foreign corporation, 10 percent or more of the value of any class of stock outstanding of such corporation, and
(II) in the case of a foreign partnership, at least a 10-percent interest in such partnership; and
(E)
(i) in the case of a foreign corporation, a description of the various classes of stock outstanding, and a list showing the name and address of, and number of shares held by, each United States person who is a shareholder of record owning at any time during the annual accounting period 5 percent or more in value of any class of stock outstanding of such foreign corporation, and
(ii) information comparable to the information described in clause (i) in the case of a foreign partnership.
The Secretary may also require the furnishing of any other information which is similar or related in nature to that specified in the preceding sentence or which the Secretary determines to be appropriate to carry out the provisions of this title.
(2) **Period for which information is to be furnished, etc.** — The information required under paragraph (1) shall be furnished for the annual accounting period of the foreign business entity ending with or within the United States person’s taxable year. The information so required shall be furnished at such time and in such manner as the Secretary shall prescribe.
(3) **Limitation** — No information shall be required to be furnished under this subsection with respect to any foreign business entity for any annual accounting period unless the Secretary has prescribed the furnishing of such information on or before the first day of such annual accounting period.
(4) **Information required from certain shareholders in certain cases** — If any foreign corporation is treated as a controlled foreign corporation for any purpose under subpart F of part III of subchapter N of chapter 1, the Secretary may require any United States person treated as a United States shareholder of such corporation for any purpose under subpart F to furnish the information required under paragraph (1).
(5) **Information required from 10-percent partner of controlled foreign partnership** — In the case of a foreign partnership which is controlled by United States persons holding at least 10-percent interests (but not by any one United States person), the Secretary may require each United States person who holds a 10-percent interest in such partnership to furnish information relating to such partnership, including information relating to such partner’s ownership interests in the partnership and allocations to such partner of partnership items.
**(b) Dollar penalty for failure to furnish information**
(1) **In general** — If any person fails to furnish, within the time prescribed under paragraph (2) of subsection (a), any information with respect to any foreign business entity required under paragraph (1) of subsection (a), such person shall pay a penalty of $10,000 for each annual accounting period with respect to which such failure exists.
(2) **Increase in penalty where failure continues after notification** — If any failure described in paragraph (1) continues for more than 90 days after the day on which the Secretary mails notice of such failure to the United States person, such person shall pay a penalty (in addition to the amount required under paragraph (1)) of $10,000 for each 30-day period (or fraction thereof) during which such failure continues with respect to any annual accounting period after the expiration of such 90-day period. The increase in any penalty under this paragraph shall not exceed $50,000.
**(c) Penalty of reducing foreign tax credit**
(1) **In general** — If a United States person fails to furnish, within the time prescribed under paragraph (2) of subsection (a), any information with respect to any foreign business entity required under paragraph (1) of subsection (a), then—
(A) in applying section 901 (relating to taxes of foreign countries and possessions of the United States) to such United States person for the taxable year, the amount of taxes (other than taxes reduced under subparagraph (B)) paid or deemed paid (other than those deemed paid under section 904(c)) to any foreign country or possession of the United States for the taxable year shall be reduced by 10 percent, and
(B) in the case of a foreign business entity which is a foreign corporation, in applying section 960 to any such United States person which is a corporation (or to any person who acquires from any other person any portion of the interest of such other person in any such foreign corporation, but only to the extent of such portion) for any taxable year, the amount of taxes paid or deemed paid by each foreign corporation with respect to which such person is required to furnish information during the annual accounting period or periods with respect to which such information is required under paragraph (2) of subsection (a) shall be reduced by 10 percent.
If such failure continues 90 days or more after notice of such failure by the Secretary to the United States person, then the amount of the reduction under this paragraph shall be 10 percent plus an additional 5 percent for each 3-month period, or fraction thereof, during which such failure to furnish information continues after the expiration of such 90-day period.
(2) **Limitation** — The amount of the reduction under paragraph (1) for each failure to furnish information with respect to a foreign business entity required under subsection (a)(1) shall not exceed whichever of the following amounts is the greater:
(A) $10,000, or
(B) the income of the foreign business entity for its annual accounting period with respect to which the failure occurs.
(3) **Coordination with subsection (b)** — The amount of the reduction which (but for this paragraph) would be made under paragraph (1) with respect to any annual accounting period shall be reduced by the amount of the penalty imposed by subsection (b) with respect to such period.
(4) **Special rules**
(A) No taxes shall be reduced under this subsection more than once for the same failure.
(B) For purposes of this subsection and subsection (b), the time prescribed under paragraph (2) of subsection (a) to furnish information (and the beginning of the 90-day period after notice by the Secretary) shall be treated as being not earlier than the last day on which (as shown to the satisfaction of the Secretary) reasonable cause existed for failure to furnish such information.
**(d) Two or more persons required to furnish information with respect to same foreign corporation** Where, but for this subsection, two or more United States persons would be required to furnish information under subsection (a) with respect to the same foreign business entity for the same period, the Secretary may by regulations provide that such information shall be required only from one person. To the extent practicable, the determination of which person shall furnish the information shall be made on the basis of actual ownership of stock.
**(e) Definitions** For purposes of this section—
(1) **Foreign business entity** — The term “foreign business entity” means a foreign corporation and a foreign partnership.
(2) **Control of corporation** — A person is in control of a corporation if such person owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of shares of all classes of stock, of a corporation. If a person is in control (within the meaning of the preceding sentence) of a corporation which in turn owns more than 50 percent of the total combined voting power of all classes of stock entitled to vote of another corporation, or owns more than 50 percent of the total value of the shares of all classes of stock of another corporation, then such person shall be treated as in control of such other corporation. For purposes of this paragraph, the rules prescribed by section 318(a) for determining ownership of stock shall apply; except that—
(A) subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person, and
(B) in applying subparagraph (C) of section 318(a)(2), the phrase “10 percent” shall be substituted for the phrase “50 percent” used in subparagraph (C).
(3) **Partnership-related definitions**
(A) *Control* — A person is in control of a partnership if such person owns directly or indirectly more than a 50 percent interest in such partnership.
(B) *50-percent interest* — For purposes of subparagraph (A), a 50-percent interest in a partnership is—
(i) an interest equal to 50 percent of the capital interest, or 50 percent of the profits interest, in such partnership, or
(ii) to the extent provided in regulations, an interest to which 50 percent of the deductions or losses of such partnership are allocated.
For purposes of the preceding sentence, rules similar to the rules of section 267(c) (other than paragraph (3)) shall apply.
(C) *10-percent interest* — A 10-percent interest in a partnership is an interest which would be described in subparagraph (B) if “10 percent” were substituted for “50 percent” each place it appears.
(4) **Annual accounting period** — The annual accounting period of a foreign business entity is the annual period on the basis of which such foreign business entity regularly computes its income in keeping its books. In the case of a specified foreign business entity (as defined in section 898), the taxable year of such foreign business entity shall be treated as its annual accounting period.
**(f) Cross references**
(1) For provisions relating to penalties for violations of this section, see section 7203.
(2) For definition of the term “United States person”, see section 7701(a)(30).
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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).
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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
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** For purposes of subpart A of this part, if there is included in the gross income of a domestic corporation any item of income under section 951(a)(1) with respect to any controlled foreign corporation with respect to which such domestic corporation is a United States shareholder, such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as are properly attributable to such item of income.
**(b) Special rules for distributions from previously taxed earnings and profits** For purposes of subpart A of this part—
(1) **In general** — If any portion of a distribution from a controlled foreign corporation to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation is excluded from gross income under section 959(a), such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as—
(A) are properly attributable to such portion, and
(B) have not been deemed to have to 11 So in original. been paid by such domestic corporation under this section for the taxable year or any prior taxable year.
(2) **Tiered controlled foreign corporations** — If section 959(b) applies to any portion of a distribution from a controlled foreign corporation to another controlled foreign corporation, such controlled foreign corporation shall be deemed to have paid so much of such other controlled foreign corporation’s foreign income taxes as—
(A) are properly attributable to such portion, and
(B) have not been deemed to have been paid by a domestic corporation under this section for the taxable year or any prior taxable year.
**(c) Special rules for foreign tax credit in year of receipt of previously taxed ea
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Federal law — U.S. Code and appendices · legal_authorities
(1) For the notice required of persons acting in a fiduciary capacity for taxpayers or for transferees, see sections 6212, 6901(g), and 6903.
(2) For application by fiduciary for determination of tax and discharge from personal liability therefor, see section 2204.
(3) For the notice required of taxpayers for redetermination of taxes claimed as credits, see sections 905(c) and 2016.
(4) For exemption certificates required to be furnished to employers by employees, see section 3402(f)(2), (3), (4), and (5).
(5) For receipts, constituting information returns, required to be furnished to employees, see section 6051.
(6) Repealed. Pub. L. 89–44, title III, § 305(b), June 21, 1965, 79 Stat. 148]
(7) For information required with respect to the redemption of stamps, see section 6805.
(8) For the statement required to be filed by a corporation expecting a net operating loss carryback or unused excess profits credit carryback, see section 6164.
(9) For the application, which a taxpayer may file for a tentative carryback adjustment of income taxes, see section 6411.
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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
**(a) General rule** For purposes of those provisions of this subchapter to which the rules contained in this section are expressly made applicable—
(1) **Members of family**
(A) *In general* — An individual shall be considered as owning the stock owned, directly or indirectly, by or for—
(i) his spouse (other than a spouse who is legally separated from the individual under a decree of divorce or separate maintenance), and
(ii) his children, grandchildren, and parents.
(B) *Effect of adoption* — For purposes of subparagraph (A)(ii), a legally adopted child of an individual shall be treated as a child of such individual by blood.
(2) **Attribution from partnerships, estates, trusts, and corporations**
(A) *From partnerships and estates* — Stock owned, directly or indirectly, by or for a partnership or estate shall be considered as owned proportionately by its partners or beneficiaries.
(B) *From trusts*
(i) Stock owned, directly or indirectly, by or for a trust (other than an employees’ trust described in section 401(a) which is exempt from tax under section 501(a)) shall be considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries in such trust.
(ii) Stock owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by such person.
(C) *From corporations* — If 50 percent or more in value of the stock in a corporation is owned, directly or indirectly, by or for any person, such person shall be considered as owning the stock owned, directly or indirectly, by or for such corporation, in that proportion which the val
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** For purposes of section 38, the amount of the low-income housing credit determined under this section for any taxable year in the credit period shall be an amount equal to—
(1) the applicable percentage of
(2) the qualified basis of each qualified low-income building.
**(b) Applicable percentage: 70 percent present value credit for certain new buildings; 30 percent present value credit for certain other buildings**
(1) **Determination of applicable percentage** — For purposes of this section—
(A) *In general* — The term “applicable percentage” means, with respect to any building, the appropriate percentage prescribed by the Secretary for the earlier of—
(i) the month in which such building is placed in service, or
(ii) at the election of the taxpayer—
(I) the month in which the taxpayer and the housing credit agency enter into an agreement with respect to such building (which is binding on such agency, the taxpayer, and all successors in interest) as to the housing credit dollar amount to be allocated to such building, or
(II) in the case of any building to which subsection (h)(4)(B) applies, the month in which the tax-exempt obligations are issued.
A month may be elected under clause (ii) only if the election is made not later than the 5th day after the close of such month. Such an election, once made, shall be irrevocable.
(B) *Method of prescribing percentages* — The percentages prescribed by the Secretary for any month shall be percentages which will yield over a 10-year period amounts of credit under subsection (a) which have a present value equal to—
(i) 70 percent of the qualified basis of a new building which is not federally subsidized for the taxable year, and
(ii) 30 percent of the qualified b
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Requirement** If, at any time during a taxable year, a corporation (hereinafter in this section referred to as the “reporting corporation”)—
(1) is a domestic corporation, and
(2) is 25-percent foreign-owned,
such corporation shall furnish, at such time and in such manner as the Secretary shall by regulations prescribe, the information described in subsection (b) and such corporation shall maintain (in the location, in the manner, and to the extent prescribed in regulations) such records as may be appropriate to determine the correct treatment of transactions with related parties as the Secretary shall by regulations prescribe (or shall cause another person to so maintain such records).
**(b) Required information**
(1) **In general** — For purposes of subsection (a), the information described in this subsection is such information as the Secretary prescribes by regulations relating to—
(A) the name, principal place of business, nature of business, and country or countries in which organized or resident, of each person which—
(i) is a related party to the reporting corporation, and
(ii) had any transaction with the reporting corporation during its taxable year,
(B) the manner in which the reporting corporation is related to each person referred to in subparagraph (A), and
(C) transactions between the reporting corporation and each foreign person which is a related party to the reporting corporation.
(2) **Additional information regarding base erosion payments** — For purposes of subsection (a) and section 6038C, if the reporting corporation or the foreign corporation to whom section 6038C applies is an applicable taxpayer, the information described in this subsection shall include—
(A) such information as the Secretary determines necessar
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Federal law — U.S. Code and appendices · legal_authorities
Page 3332
TITLE 26—INTERNAL REVENUE CODE
§ 6038
1 See References in Text note below.
(i)(I) the corporation has filed a return
but the shareholder’s treatment on his re-
turn is (or may be) inconsistent with the
treatment of the item on the corporate re-
turn, or
(II) the corporation has not filed a re-
turn, and
(ii) the shareholder files with the Sec-
retary a statement identifying the incon-
sistency,
paragraph (1) shall not apply to such item.
(B) Shareholder receiving incorrect informa-
tion
A shareholder shall be treated as having
complied with clause (ii) of subparagraph (A)
with respect to a subchapter S item if the
shareholder—
(i) demonstrates to the satisfaction of
the Secretary that the treatment of the
subchapter S item on the shareholder’s re-
turn is consistent with the treatment of
the item on the schedule furnished to the
shareholder by the corporation, and
(ii) elects to have this paragraph apply
with respect to that item.
(3) Effect of failure to notify
In any case—
(A) described in subparagraph (A)(i)(I) of
paragraph (2), and
(B) in which the shareholder does not com-
ply with subparagraph (A)(ii) of paragraph
(2),
any adjustment required to make the treat-
ment of the items by such shareholder con-
sistent with the treatment of the items on the
corporate return shall be treated as arising
out of mathematical or clerical errors and as-
sessed according to section 6213(b)(1). Para-
graph (2) of section 6213(b) shall not apply to
any assessment referred to in the preceding
sentence.
(4) Subchapter S item
For purposes of this subsection, the term
‘‘subchapter S item’’ means any item of an S
corporation to the extent that regulations pre-
scribed by the Secretary provide that, for pur-
poses of this subtitle, such item is mor
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