Internal Revenue Code Sec 965 (Excerpts)

Excerpts from the Internal Revenue Code:

 

965(a)Treatment of Deferred Foreign Income as Subpart F Income.—

In the case of the last taxable year of a deferred foreign income corporation which begins before January 1, 2018, the subpart F income of such foreign corporation (as otherwise determined for such taxable year under section 952) shall be increased by the greater of—

965(a)(1) the accumulated post-1986 deferred foreign income of such corporation determined as of November 2, 2017, or

965(a)(2) the accumulated post-1986 deferred foreign income of such corporation determined as of December 31, 2017.

965(b)Reduction in Amounts Included in Gross Income of United States Shareholders of Specified Foreign Corporations With Deficits in Earnings and Profits.—

965(b)(1)In general.—In the case of a taxpayer which is a United States shareholder with respect to at least one deferred foreign income corporation and at least one E&P deficit foreign corporation, the amount which would (but for this subsection) be taken into account under section 951(a)(1) by reason of subsection (a) as such United States shareholder's pro rata share of the subpart F income of each deferred foreign income corporation shall be reduced by the amount of such United States shareholder's aggregate foreign E&P deficit which is allocated under paragraph (2) to such deferred foreign income corporation.

965(b)(4)Treatment of earnings and profits in future years.—

 965(b)(4)(A)Reduced earnings and profits treated as previously taxed income when distributed.—For purposes of applying section 959 in any taxable year beginning with the taxable year described in subsection (a), with respect to any United States shareholder of a deferred foreign income corporation, an amount equal to such shareholder's reduction under paragraph (1) which is allocated to such deferred foreign income corporation under this subsection shall be treated as an amount which was included in the gross income of such United States shareholder under section 951(a).

965(b)(4)(B)E&P deficits.—For purposes of this title, with respect to any taxable year beginning with the taxable year described in subsection (a), a United States shareholder's pro rata share of the earnings and profits of any E&P deficit foreign corporation under this subsection shall be increased by the amount of the specified E&P deficit of such corporation taken into account by such shareholder under paragraph (1), and, for purposes of section 952, such increase shall be attributable to the same activity to which the deficit so taken into account was attributable.

965(d)Deferred Foreign Income Corporation; Accumulated Post-1986 Deferred Foreign Income.—

For purposes of this section—965(d)(1)Deferred foreign income corporation.—

The term “deferred foreign income corporation” means, with respect to any United States shareholder, any specified foreign corporation of such United States shareholder which has accumulated post-1986 deferred foreign income (as of the date referred to in paragraph (1) or (2) of subsection (a)) greater than zero.

965(d)(2)Accumulated post-1986 deferred foreign income.—The term “accumulated post-1986 deferred foreign income” means the post-1986 earnings and profits except to the extent such earnings—

965(d)(2)(A) are attributable to income of the specified foreign corporation which is effectively connected with the conduct of a trade or business within the United States and subject to tax under this chapter, or

965(d)(2)(B) in the case of a controlled foreign corporation, if distributed, would be excluded from the gross income of a United States shareholder under section 959.

To the extent provided in regulations or other guidance prescribed by the Secretary, in the case of any controlled foreign corporation which has shareholders which are not United States shareholders, accumulated post-1986 deferred foreign income shall be appropriately reduced by amounts which would be described in subparagraph (B) if such shareholders were United States shareholders.

965(d)(3)Post-1986 earnings and profits.—The term “post-1986 earnings and profits” means the earnings and profits of the foreign corporation (computed in accordance with sections 964(a) and 986, and by only taking into account periods when the foreign corporation was a specified foreign corporation) accumulated in taxable years beginning after December 31, 1986, and determined—

965(d)(3)(A) as of the date referred to in paragraph (1) or (2) of subsection (a), whichever is applicable with respect to such foreign corporation, and

965(d)(3)(B) without diminution by reason of dividends distributed during the taxable year described in subsection (a) other than dividends distributed to another specified foreign corporation.

965(e)Specified Foreign Corporation.—

965(e)(1)In general.—For purposes of this section, the term “specified foreign corporation” means—

965(e)(1)(A) any controlled foreign corporation, and

965(e)(1)(B) any foreign corporation with respect to which one or more domestic corporations is a United States shareholder.

965(e)(2)Application to certain foreign corporations.—For purposes of sections 951 and 961, a foreign corporation described in paragraph (1)(B) shall be treated as a controlled foreign corporation solely for purposes of taking into account the subpart F income of such corporation under subsection (a) (and for purposes of applying subsection (f)).