26 U.S.C. § 244 — Untitled legal text

Page 980 TITLE 26—INTERNAL REVENUE CODE [§ 244 EFFECTIVE DATE OF 1987 AMENDMENT Pub. L. 100–203, title X, § 10221(e), Dec. 22, 1987, 101 Stat. 1330–409, as amended by Pub. L. 100–647, title II, § 2004(i)(1), Nov. 10, 1988, 102 Stat. 3603, provided that: ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 244 to 246A, 805, 854, and 861 of this title] shall apply to dividends received or accrued after December 31, 1987, in taxable years ending after such date. ‘‘(2) AMENDMENTS RELATING TO LIMITATIONS.—The amendments made by subsection (c) [amending sections 246 and 805 of this title] shall apply to taxable years be- ginning after December 31, 1987.’’ EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 411(b)(2)(C)(iv) of Pub. L. 99–514 applicable, except as otherwise provided, to costs paid or incurred after Dec. 31, 1986, in taxable years ending after such date, see section 411(c) of Pub. L. 99–514 set out as a note under section 263 of this title. Amendment by section 611(a)(1) of Pub. L. 99–514 ap- plicable to dividends received or accrued after Dec. 31, 1986, in taxable years ending after such date, see sec- tion 611(b) of Pub. L. 99–514, set out as a note under sec- tion 246 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 Pub. L. 98–369, set out as an Effective Date note under section 801 of this title. EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–34 applicable to taxable years beginning after Dec. 31, 1981, see section 232(c) of Pub. L. 97–34, set out as a note under section 535 of this title. EFFECTIVE DATE OF 1976 AMENDMENT For effective date of amendment by section 1031(b)(2) of Pub. L. 94–455, see section 1031(c) of Pub. L. 94–455, set out as a note set out under section 904 of this title. For effective date of amendment by section 1051(f)(1), (2) of Pub. L. 94–455, see section 1051(i) of Pub. L. 94–455, set out as a note under section 27 of this title. Amendment by section 1901(a)(34), (b)(1), (21) of Pub. L. 94–455 effective for 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. For effective date of amendment by section 1906(b)(3)(C)(ii) of Pub. L. 94–455, see section 1906(d) of Pub. L. 94–455, set out as a note under section 6013 of this title. EFFECTIVE DATE OF 1975 AMENDMENT Amendment by Pub. L. 94–12 applicable to taxable years beginning after Dec. 31, 1974, see section 305(c) of Pub. L. 94–12, set out as a note under section 535 of this title. EFFECTIVE DATE OF 1969 AMENDMENT Pub. L. 91–172, title V, § 504(d), Dec. 30, 1969, 83 Stat. 633, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending this section and sections 381, 615, 617, 703, and 1016 of this title] shall apply with respect to ex- ploration expenditures paid or incurred after December 31, 1969. ‘‘(2) PRESUMPTION OF ELECTION UNDER SECTION 617.— For purposes of section 617 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], an election under section 615(e) of such Code, which is effective with re- spect to exploration expenditures paid or incurred be- fore January 1, 1970, shall be treated as an election under section 617(a) of such Code with respect to explo- ration expenditures paid or incurred after December 31, 1969. The preceding sentence shall not apply to any tax- payer who notifies the Secretary of the Treasury or his delegate (at such time and in such manner as the Sec- retary or his delegate prescribes by regulations) that he does not desire his election under section 615(e) to be so treated.’’ EFFECTIVE DATE OF 1968 AMENDMENT Pub. L. 90–364, title I, § 103(f), June 28, 1968, 82 Stat. 264, provided that: ‘‘Except as provided by section 104 [formerly set out as notes under sections 51 and 6154 of this title], the amendments made by this section [en- acting section 6425, amending this section and sections 6020, 6154, 6651, 6655, 7203, and 7701, and repealing sec- tions 6016 and 6074 of this title] shall apply with respect to taxable years beginning after December 31, 1967.’’ EFFECTIVE DATE OF 1964 AMENDMENT Pub. L. 88–272, title II, § 214(c), Feb. 26, 1964, 78 Stat. 55, provided that: ‘‘The amendments made by sub- sections (a) [amending this section] and (b) [amending sections 244, 246, 804, and 809 of this title] shall apply with respect to dividends received in taxable years end- ing after December 31, 1963.’’ EFFECTIVE DATE OF 1960 AMENDMENT Pub. L. 86–779, § 3(c), Sept. 14, 1960, 74 Stat. 998, pro- vided that: ‘‘The amendments made by subsections (a) and (b) [amending this section and section 861 of this title] shall apply to dividends received after December 31, 1959, in taxable years ending after such date.’’ Amendment by section 10(g) of Pub. L. 86–779 applica- ble with respect to taxable years of real estate invest- ment trusts beginning after Dec. 31, 1960, see section 10(k) of Pub. L. 86–779, set out as an Effective Date note under section 856 of this title. EFFECTIVE DATE OF 1958 AMENDMENT Pub. L. 85–866, § 57(d), Sept. 2, 1958, 72 Stat. 1646, pro- vided that: ‘‘The amendments made by this section [en- acting sections 1242 and 1243 and amending this section and sections 165 and 246 of this title] shall apply with respect to taxable years beginning after the date of the enactment of this Act [Sept. 2, 1958].’’ SAVINGS PROVISION For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining li- ability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liabil- ity for tax for periods ending after Nov. 5, 1990, see sec- tion 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title. [§ 244. Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(41)(A), Dec. 19, 2014, 128 Stat. 4043] Section, Aug. 16, 1954, ch. 736, 68A Stat. 73; Pub. L. 88–272, title II, § 214(b)(1), Feb. 26, 1964, 78 Stat. 55; Pub. L. 95–600, title III, § 301(b)(3), Nov. 6, 1978, 92 Stat. 2820; Pub. L. 99–514, title VI, § 611(a)(2), Oct. 22, 1986, 100 Stat. 2249; Pub. L. 100–203, title X, § 10221(a)(2), Dec. 22, 1987, 101 Stat. 1330–408; Pub. L. 100–647, title II, § 2004(i)(2), Nov. 10, 1988, 102 Stat. 3603, allowed to corporations as a deduction a percentage of the amount received as dividends on the preferred stock of a public utility. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal not applicable to preferred stock issued before Oct. 1, 1942 (determined in the same manner as under Page 981 TITLE 26—INTERNAL REVENUE CODE § 245 section 247 of this title as in effect before its repeal by Pub. L. 113–295), see section 221(a)(41)(K) of Pub. L. 113–295, set out as an Effective Date of 2014 Amendment note under section 172 of this title. Except as otherwise provided in section 221(a) of Pub. L. 113–295, repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as an Effective Date of 2014 Amendment note under section 1 of this title. § 245. Dividends received from certain foreign corporations (a) Dividends from 10-percent owned foreign cor- porations (1) In general In the case of dividends received by a cor- poration from a qualified 10-percent owned for- eign corporation, there shall be allowed as a deduction an amount equal to the percent (specified in section 243 for the taxable year) of the U.S.-source portion of such dividends. (2) Qualified 10-percent owned foreign cor- poration For purposes of this subsection, the term ‘‘qualified 10-percent owned foreign corpora- tion’’ means any foreign corporation (other than a passive foreign investment company) if at least 10 percent of the stock of such cor- poration (by vote and value) is owned by the taxpayer. (3) U.S.-source portion For purposes of this subsection, the U.S.- source portion of any dividend is an amount which bears the same ratio to such dividend as— (A) the post-1986 undistributed U.S. earn- ings, bears to (B) the total post-1986 undistributed earn- ings. (4) Post-1986 undistributed earnings The term ‘‘post-1986 undistributed earnings’’ means the amount of the earnings and profits of the foreign corporation (computed in ac- cordance with sections 964(a) and 986) accumu- lated in taxable years beginning after Decem- ber 31, 1986— (A) as of the close of the taxable year of the foreign corporation in which the divi- dend is distributed, and (B) without diminution by reason of divi- dends distributed during such taxable year. (5) Post-1986 undistributed U.S. earnings For purposes of this subsection, the term ‘‘post-1986 undistributed U.S. earnings’’ means the portion of the post-1986 undistributed earnings which is attributable to— (A) income of the qualified 10-percent owned foreign corporation which is effec- tively connected with the conduct of a trade or business within the United States and subject to tax under this chapter, or (B) any dividend received (directly or through a wholly owned foreign corporation) from a domestic corporation at least 80 per- cent of the stock of which (by vote and value) is owned (directly or through such wholly owned foreign corporation) by the qualified 10-percent owned foreign corpora- tion. (6) Special rule If the 1st day on which the requirements of paragraph (2) are met with respect to any for- eign corporation is in a taxable year of such corporation beginning after December 31, 1986, the post-1986 undistributed earnings and the post-1986 undistributed U.S. earnings of such corporation shall be determined by only tak- ing into account periods beginning on and after the 1st day of the 1st taxable year in which such requirements are met. (7) Coordination with subsection (b) Earnings and profits of any qualified 10-per- cent owned foreign corporation for any tax- able year shall not be taken into account under this subsection if the deduction pro- vided by subsection (b) would be allowable with respect to dividends paid out of such earnings and profits. (8) Disallowance of foreign tax credit No credit shall be allowed under section 901 for any taxes paid or accrued (or treated as paid or accrued) with respect to the United States-source portion of any dividend received by a corporation from a qualified 10-percent- owned foreign corporation. (9) Coordination with section 904 For purposes of section 904, the U.S.-source portion of any dividend received by a corpora- tion from a qualified 10-percent owned foreign corporation shall be treated as from sources in the United States. (10) Coordination with treaties If— (A) any portion of a dividend received by a corporation from a qualified 10-percent- owned foreign corporation would be treated as from sources in the United States under paragraph (9), (B) under a treaty obligation of the United States (applied without regard to this sub- section), such portion would be treated as arising from sources outside the United States, and (C) the taxpayer chooses the benefits of this paragraph, this subsection shall not apply to such divi- dend (but subsections (a), (b), and (c) of sec- tion 904 and sections 907 and 960 shall be ap- plied separately with respect to such portion of such dividend). (11) Coordination with section 1248 For purposes of this subsection, the term ‘‘dividend’’ does not include any amount treat- ed as a dividend under section 1248. (12) Dividends derived from RICs and REITs ineligible for deduction Regulated investment companies and real estate investment trusts shall not be treated as domestic corporations for purposes of para- graph (5)(B). (b) Certain dividends received from wholly owned foreign subsidiaries (1) In general In the case of dividends described in para- graph (2) received from a foreign corporation