26 U.S.C. § 891 — Doubling of rates of tax on citizens and

Page 2092 TITLE 26—INTERNAL REVENUE CODE § 891 Editorial Notes AMENDMENTS 1989—Subsec. (b)(1). Pub. L. 101–239, § 7811(i)(8)(B), sub- stituted ‘‘paragraphs (2) and (3)’’ for ‘‘paragraph (2)’’. Subsec. (b)(3). Pub. L. 101–239, § 7811(i)(8)(A), added par. (3). Former par. (3) redesignated (4). Subsec. (b)(4). Pub. L. 101–239, § 7811(i)(8)(A), (9), redes- ignated former par. (3) as (4) and substituted ‘‘United States source gross transportation income’’ for ‘‘trans- portation income’’ in introductory provisions and in subpar. (A). 1988—Subsec. (b)(1). Pub. L. 100–647 substituted ‘‘under section 863(c)(2)’’ for ‘‘under section 863(c)’’ and inserted at end ‘‘To the extent provided in regulations, such term does not include any income of a kind to which an exemption under paragraph (1) or (2) of sec- tion 883(a) would not apply.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1986, see section 1212(f) of Pub. L. 99–514, set out as an Effective Date of 1986 Amendment note under sec- tion 863 of this title. APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99–514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATES For nonapplication of amendment by section 1212(b)(1) of Pub. L. 99–514 (enacting this section) to the extent application of such amendment would be con- trary to any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such pur- poses any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(3), (4) of Pub. L. 100–647, set out as a note under section 861 of this title. SUBPART D—MISCELLANEOUS PROVISIONS Sec. 891. Doubling of rates of tax on citizens and cor- porations of certain foreign countries. 892. Income of foreign governments and of inter- national organizations. 893. Compensation of employees of foreign govern- ments or international organizations. 894. Income affected by treaty. 895. Income derived by a foreign central bank of issue from obligations of the United States or from bank deposits. 896. Adjustment of tax on nationals, residents, and corporations of certain foreign coun- tries. 897. Disposition of investment in United States real property. 898. Taxable year of certain foreign corporations. Editorial Notes AMENDMENTS 1989—Pub. L. 101–239, title VII, § 7401(c), Dec. 19, 1989, 103 Stat. 2357, added item 898. 1986—Pub. L. 99–514, title XII, § 1212(b)(1), Oct. 22, 1986, 100 Stat. 2537, redesignated former subpart (C) as (D). 1980—Pub. L. 96–499, title XI, § 1122(b), Dec. 5, 1980, 94 Stat. 2687, added item 897. 1966—Pub. L. 89–809, title I, §§ 102(a)(4)(B), 105(c), Nov. 13, 1966, 80 Stat. 1543, 1565, substituted ‘‘affected by treaty’’ for ‘‘exempt under treaty’’ in item 894, inserted ‘‘or from bank deposits’’ in item 895, and added item 896. 1961—Pub. L. 87–29, § 1(b), May 4, 1961, 75 Stat. 64, added item 895. § 891. Doubling of rates of tax on citizens and corporations of certain foreign countries Whenever the President finds that, under the laws of any foreign country, citizens or corpora- tions of the United States are being subjected to discriminatory or extraterritorial taxes, the President shall so proclaim and the rates of tax imposed by sections 1, 3, 11, 801, 831, 852, 871, and 881 shall, for the taxable year during which such proclamation is made and for each taxable year thereafter, be doubled in the case of each citizen and corporation of such foreign country; but the tax at such doubled rate shall be considered as imposed by such sections as the case may be. In no case shall this section operate to increase the taxes imposed by such sections (computed with- out regard to this section) to an amount in ex- cess of 80 percent of the taxable income of the taxpayer (computed without regard to the de- ductions allowable under section 151 and under part VIII of subchapter B). Whenever the Presi- dent finds that the laws of any foreign country with respect to which the President has made a proclamation under the preceding provisions of this section have been modified so that discrimi- natory and extraterritorial taxes applicable to citizens and corporations of the United States have been removed, he shall so proclaim, and the provisions of this section providing for dou- bled rates of tax shall not apply to any citizen or corporation of such foreign country with re- spect to any taxable year beginning after such proclamation is made. (Aug. 16, 1954, ch. 736, 68A Stat. 283; Mar. 13, 1956, ch. 83, § 5(6), 70 Stat. 49; Pub. L. 86–69, § 3(f)(1), June 25, 1959, 73 Stat. 140; Pub. L. 98–369, div. A, title II, § 211(b)(12), July 18, 1984, 98 Stat. 755; Pub. L. 99–514, title X, § 1024(c)(13), Oct. 22, 1986, 100 Stat. 2408.) Editorial Notes AMENDMENTS 1986—Pub. L. 99–514 struck out reference to section 821. 1984—Pub. L. 98–369 substituted ‘‘801’’ for ‘‘802’’. 1959—Pub. L. 86–69 struck out reference to section 811. 1956—Act Mar. 13, 1956, inserted reference to section 811. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 1024(e) of Pub. L. 99–514, set out as a note under section 831 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, see section 215 of Page 2093 TITLE 26—INTERNAL REVENUE CODE § 892 Pub. L. 98–369, set out as an Effective Date note under section 801 of this title. EFFECTIVE DATE OF 1959 AMENDMENT Amendment by Pub. L. 86–69 applicable only with re- spect to taxable years beginning after Dec. 31, 1957, see section 4 of Pub. L. 86–69, set out an Effective Date note under section 381 of this title. EFFECTIVE DATE OF 1956 AMENDMENT Amendment by act Mar. 13, 1956, applicable only to taxable years beginning after Dec. 31, 1954, see section 6 of act Mar. 13, 1956, set out as a note under section 316 of this title. § 892. Income of foreign governments and of international organizations (a) Foreign governments (1) In general The income of foreign governments received from— (A) investments in the United States in— (i) stocks, bonds, or other domestic secu- rities owned by such foreign governments, or (ii) financial instruments held in the execution of governmental financial or monetary policy, or (B) interest on deposits in banks in the United States of moneys belonging to such foreign governments, shall not be included in gross income and shall be exempt from taxation under this subtitle. (2) Income received directly or indirectly from commercial activities (A) In general Paragraph (1) shall not apply to any in- come— (i) derived from the conduct of any com- mercial activity (whether within or out- side the United States), (ii) received by a controlled commercial entity or received (directly or indirectly) from a controlled commercial entity, or (iii) derived from the disposition of any interest in a controlled commercial entity. (B) Controlled commercial entity For purposes of subparagraph (A), the term ‘‘controlled commercial entity’’ means any entity engaged in commercial activities (whether within or outside the United States) if the government— (i) holds (directly or indirectly) any in- terest in such entity which (by value or voting interest) is 50 percent or more of the total of such interests in such entity, or (ii) holds (directly or indirectly) any other interest in such entity which pro- vides the foreign government with effec- tive control of such entity. For purposes of the preceding sentence, a central bank of issue shall be treated as a controlled commercial entity only if en- gaged in commercial activities within the United States. (3) Treatment as resident For purposes of this title, a foreign govern- ment shall be treated as a corporate resident of its country. A foreign government shall be so treated for purposes of any income tax trea- ty obligation of the United States if such gov- ernment grants equivalent treatment to the Government of the United States. (b) International organizations The income of international organizations re- ceived from investments in the United States in stocks, bonds, or other domestic securities owned by such international organizations, or from interest on deposits in banks in the United States of moneys belonging to such inter- national organizations, or from any other source within the United States, shall not be included in gross income and shall be exempt from tax- ation under this subtitle. (c) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section. (Aug. 16, 1954, ch. 736, 68A Stat. 284; Pub. L. 99–514, title XII, § 1247(a), Oct. 22, 1986, 100 Stat. 2583; Pub. L. 100–647, title I, § 1012(t)(1)–(3), Nov. 10, 1988, 102 Stat. 3527; Pub. L. 101–508, title XI, § 11704(a)(35), Nov. 5, 1990, 104 Stat. 1388–519.) Editorial Notes AMENDMENTS 1990—Subsec. (a)(2)(A). Pub. L. 101–508 made clari- fying amendment to Pub. L. 100–647, § 1012(t)(1). See 1988 Amendment note below. 1988—Subsec. (a)(2)(A). Pub. L. 100–647, § 1012(t)(1), (2), as amended by Pub. L. 101–508, amended cl. (ii) gen- erally and added cl. (iii). Prior to amendment, cl. (ii) read as follows: ‘‘received from or by a controlled com- mercial entity.’’ Subsec. (a)(3). Pub. L. 100–647, § 1012(t)(3), added par. (3). 1986—Pub. L. 99–514 amended section generally. Prior to amendment, section read as follows: ‘‘The income of foreign governments or international organizations re- ceived from investments in the United States in stocks, bonds, or other domestic securities, owned by such for- eign governments or by international organizations, or from interest on deposits in banks in the United States of moneys belonging to such foreign governments or international organizations, or from any other source within the United States, shall not be included in gross income and shall be exempt from taxation under this subtitle.’’ Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Pub. L. 99–514, title XII, § 1247(b), Oct. 22, 1986, 100 Stat. 2584, provided that: ‘‘The amendment made by subsection (a) [amending this section] shall apply to amounts received on or after July 1, 1986, except that no amount shall be required to be deducted and with- held by reason of the amendment made by subsection (a) from any payment made before the date of the en- actment of this Act [Oct. 22, 1986].’’ APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99–514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATES For nonapplication of amendment by section 1247(a) of Pub. L. 99–514 to the extent application of such