Source: https://www.law.cornell.edu/uscode/text/26/881?qt-us_code_tabs=0
Timestamp: 2016-02-07 02:38:04
Document Index: 328484090

Matched Legal Cases: ['§ 881', '§ 881', '§ 881', '§\u202f104', '§\u202f313', '§\u202f1', '§\u202f1901', '§\u202f42', '§\u202f1211', '§\u202f1810', '§\u202f1012', '§\u202f13237', '§\u202f411', '§\u202f412', '§\u202f502', '§\u202f420', '§\u202f420', '§\u202f420', '§\u202f411', '§\u202f13237', '§\u202f13237', '§\u202f13237', '§\u202f13237', '§\u202f1810', '§\u202f1810', '§\u202f1211', '§\u202f1273', '§\u202f1273', '§\u202f1899', '§\u202f1273', '§\u202f1899', '§\u202f127', '§\u202f1810', '§\u202f1899', '§\u202f1223', '§\u202f1214', '§\u202f127', '§\u202f42', '§\u202f128', '§\u202f130', '§\u202f127', '§\u202f1899', '§\u202f128', '§\u202f127', '§\u202f1899', '§\u202f313', '§\u202f313', '§\u202f420', '§\u202f130', '§\u202f2']

26 U.S. Code § 881 - Tax on income of foreign corporations not connected with United States business | US Law | LII / Legal Information Institute
U.S. Code › Title 26 › Subtitle A › Chapter 1 › Subchapter N › Part II › Subpart B › § 881 26 U.S. Code § 881 - Tax on income of foreign corporations not connected with United States business
Tax on income of foreign corporations not connected with United States business
(a) Imposition of taxExcept as provided in subsection (c), there is hereby imposed for each taxable year a tax of 30 percent of the amount received from sources within the United States by a foreign corporation as—
gains described in section 631(b) or (c),
(b) Exception for certain possessions
(1) Guam, American Samoa, the Northern Mariana Islands, and the Virgin IslandsFor purposes of this section and section 884, a corporation created or organized in Guam, American Samoa, the Northern Mariana Islands, or the Virgin Islands or under the law of any such possession shall not be treated as a foreign corporation for any taxable year if—
(A) Foreign personFor purposes of paragraph (1), the term “foreign person” means any person other than—
(B) Indirect ownership rules
For purposes of paragraph (1), the rules of section 318(a)(2) shall apply except that “5 percent” shall be substituted for “50 percent” in subparagraph (C) thereof.
(c) Repeal of tax on interest of foreign corporations received from certain portfolio debt investments
In the case of any portfolio interest received by a foreign corporation from sources within the United States, no tax shall be imposed under paragraph (1) or (3) of subsection (a).
(2) Portfolio interestFor purposes of this subsection, the term “portfolio interest” means any interest (including original issue discount) which—
(3) Portfolio interest shall not include interest received by certain personsFor purposes of this subsection, the term “portfolio interest” shall not include any portfolio interest which—
is received by a 10-percent shareholder (within the meaning of section 871(h)(3)(B)), or
is received by a controlled foreign corporation from a related person (within the meaning of section 864(d)(4)).
For purposes of this subsection, the term “portfolio interest” shall not include any interest which is treated as not being portfolio interest under the rules of section 871(h)(4).
(5) Special rules for controlled foreign corporations
(A) In generalIn the case of any portfolio interest received by a controlled foreign corporation, the following provisions shall not apply:
Subparagraph (A) of section 954(b)(3) (relating to exception where foreign base company income is less than 5 percent or $1,000,000).
Paragraph (4) of section 954(b) (relating to exception for certain income subject to high foreign taxes).
Clause (i) of section 954(c)(3)(A) (relating to certain income received from related persons).
(B) Controlled foreign corporation
For purposes of this subsection, the term “controlled foreign corporation” has the meaning given to such term by section 957(a).
(6) Secretary may cease application of this subsection
Under rules similar to the rules of section 871(h)(6), the Secretary may provide that this subsection shall not apply to payments of interest described in section 871(h)(6).
For purposes of this subsection, the term “registered form” has the meaning given such term by section 163(f).
(d) Tax not to apply to certain interest and dividends
No tax shall be imposed under paragraph (1) or (3) of subsection (a) on any amount described in section 871(i)(2).
(e) Tax not to apply to certain dividends of regulated investment companies
Except as provided in subparagraph (B), no tax shall be imposed under paragraph (1) of subsection (a) on any interest-related dividend (as defined in section 871(k)(1)) received from a regulated investment company.
(B) ExceptionSubparagraph (A) shall not apply—
to any dividend referred to in section 871(k)(1)(B), and
to any interest-related dividend received by a controlled foreign corporation (within the meaning of section 957(a)) to the extent such dividend is attributable to interest received by the regulated investment company from a person who is a related person (within the meaning of section 864(d)(4)) with respect to such controlled foreign corporation.
(C) Treatment of dividends received by controlled foreign corporations
The rules of subsection (c)(5)(A) shall apply to any interest-related dividend received by a controlled foreign corporation (within the meaning of section 957(a)) to the extent such dividend is attributable to interest received by the regulated investment company which is described in clause (ii) of section 871(k)(1)(E) (and not described in clause (i) or (iii) of such section).
No tax shall be imposed under paragraph (1) of subsection (a) on any short-term capital gain dividend (as defined in section 871(k)(2)) received from a regulated investment company.
For special rules for original issue discount, see section 871(g).
(Aug. 16, 1954, ch. 736, 68A Stat. 282; Pub. L. 89–809, title I, § 104(a), Nov. 13, 1966, 80 Stat. 1555; Pub. L. 92–178, title III, § 313(a), (c), Dec. 10, 1971, 85 Stat. 526, 527; Pub. L. 92–606, § 1(e)(1), Oct. 31, 1972, 86 Stat. 1497; Pub. L. 94–455, title XIX, § 1901(b)(3)(I), Oct. 4, 1976, 90 Stat. 1793; Pub. L. 98–369, div. A, title I, §§ 42(a)(10), 127(b), 128(b), 130(a), July 18, 1984, 98 Stat. 557, 650, 654, 660; Pub. L. 99–514, title XII, §§ 1211(b)(6), 1214(c)(2), 1223(b)(2), 1273(b)(1), (2)(A), title XVIII, §§ 1810(d)(1)(B), (3)(C), (e)(2)(B), 1899A(22), (23), (68), Oct. 22, 1986, 100 Stat. 2536, 2542, 2558, 2595, 2596, 2825, 2826, 2959, 2962; Pub. L. 100–647, title I, § 1012(i)(17), Nov. 10, 1988, 102 Stat. 3510; Pub. L. 103–66, title XIII, § 13237(a)(2), (c)(2), (3), Aug. 10, 1993, 107 Stat. 507, 508; Pub. L. 108–357, title IV, §§ 411(a)(2), 420(a), (c), Oct. 22, 2004, 118 Stat. 1503, 1513, 1514; Pub. L. 109–135, title IV, § 412(jj), Dec. 21, 2005, 119 Stat. 2639; Pub. L. 111–147, title V, § 502(b)(2)(B), Mar. 18, 2010, 124 Stat. 107.)
2010—Subsec. (c)(2). Pub. L. 111–147 amended par. (2) generally. Prior to amendment, par. (2) defined portfolio interest to also include interest on certain obligations not in registered form.
2005—Subsec. (e)(1)(C). Pub. L. 109–135 inserted “interest-related dividend received by a controlled foreign corporation” after “shall apply to any”.
2004—Subsec. (b). Pub. L. 108–357, § 420(c)(1), substituted “possessions” for “Guam and Virgin Islands corporations” in heading.
Subsec. (b)(1). Pub. L. 108–357, § 420(c)(2), substituted “Guam, American Samoa, the Northern Mariana Islands, and the Virgin Islands” for “In general” in heading.
Subsec. (b)(2), (3). Pub. L. 108–357, § 420(a), added par. (2) and redesignated former par. (2) as (3).
Subsec. (e), (f). Pub. L. 108–357, § 411(a)(2), added subsec. (e) and redesignated former subsec. (e) as (f).
1993—Subsec. (c)(2)(B)(ii). Pub. L. 103–66, § 13237(c)(2), substituted “section 871(h)(5)” for “section 871(h)(4)”.
Subsec. (c)(4), (5). Pub. L. 103–66, § 13237(a)(2), added par. (4) and redesignated former par. (4) as (5). Former par. (5) redesignated (6).
Subsec. (c)(6). Pub. L. 103–66, § 13237(a)(2), (c)(3), redesignated par. (5) as (6) and substituted “section 871(h)(6)” for “section 871(h)(5)” in two places. Former par. (6) redesignated (7).
Subsec. (c)(7). Pub. L. 103–66, § 13237(a)(2), redesignated par. (6) as (7).
1988—Subsec. (c)(4)(A)(ii) to (v). Pub. L. 100–647 added cls. (ii) and (iii) and struck out former cls. (ii) to (v), which read as follows:
“(ii) Paragraph (4) of section 954(b) (relating to corporations not formed or availed of to avoid tax).
“(iii) Subparagraph (B) of section 954(c)(3) (relating to certain income derived in active conduct of trade or business).
“(iv) Subparagraph (C) of section 954(c)(3) (relating to certain income derived by an insurance company).
“(v) Subparagraphs (A) and (B) of section 954(c)(4) (relating to exception for certain income received from related persons).”
1986—Subsec. (a)(3)(A). Pub. L. 99–514, § 1810(e)(2)(B), amended subpar. (A) generally, striking out “any gain not in excess of” before “the original issue discount”.
Subsec. (a)(3)(B). Pub. L. 99–514, § 1810(e)(2)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the payment of interest on an original issue discount obligation, an amount equal to the original issue discount accrued on such obligation since the last payment of interest thereon (except that such original issue discount shall be taken into account under this subparagraph only to the extent that the tax thereon does not exceed the interest payment less the tax imposed by paragraph (1) thereon), and”.
Subsec. (a)(4). Pub. L. 99–514, § 1211(b)(6), struck out “or from payments which are treated as being so contingent under section 871(e),” after “sold or exchanged,”.
Subsec. (b)(1). Pub. L. 99–514, § 1273(b)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “For purposes of this section, a corporation created or organized in Guam or the Virgin Islands or under the law of Guam or the Virgin Islands shall not be treated as a foreign corporation for any taxable year if—
Subsec. (b)(2). Pub. L. 99–514, § 1273(b)(1), (2)(A), redesignated par. (3) as (2) and struck out former par. (2) which provided that par. (1) of this subsection not apply with respect to income tax liability incurred to Guam.
Subsec. (b)(2)(A). Pub. L. 99–514, § 1899A(22), substituted “paragraph” for “Paragraph”.
Subsec. (b)(3), (4). Pub. L. 99–514, § 1273(b)(2)(A), redesignated par. (3) as (2) and struck out par. (4) which provided a cross reference to sections 934 and 934A.
Subsec. (c). Pub. L. 99–514, § 1899A(68), made clarifying amendment to directory language of Pub. L. 98–369, § 127(b)(1). See 1984 Amendment note below.
Subsec. (c)(2). Pub. L. 99–514, § 1810(d)(1)(B), (3)(C), inserted “which would be subject to tax under subsection (a) but for this subsection and” in introductory provisions and substituted “receives a statement” for “has received a statement” in subpar. (B)(ii).
Subsec. (c)(3)(C). Pub. L. 99–514, § 1899A(23), inserted a closing parenthesis following “section 864(d)(4)”.
Subsec. (c)(4)(A)(i). Pub. L. 99–514, § 1223(b)(2), substituted “less than 5 percent or $1,000,000” for “less than 10 percent”.
Subsecs. (d), (e). Pub. L. 99–514, § 1214(c)(2), added subsec. (d) and redesignated former subsec. (d) as (e).
1984—Subsec. (a). Pub. L. 98–369, § 127(b)(2), substituted “Except as provided in subsection (c), there” for “There” in introductory provision.
Subsec. (a)(1). Pub. L. 98–369, § 42(a)(10), substituted “section 1273” for “section 1232(b)”.
Subsec. (a)(3). Pub. L. 98–369, § 128(b)(1), amended par. (3) generally, substituting in subpar. (A), “a sale or exchange of an original issue discount obligation, the amount of any gain not in excess of the original issue discount accruing while such obligation was held by the foreign corporation (to the extent such discount was not theretofore taken into account under subparagraph (B)), and” for “bonds or other evidences of indebtedness issued after September 28, 1965, and before April 1, 1972, amounts which under section 1232(a)(2)(B) are considered as ordinary income, and, in the case of corporate obligations issued after May 27, 1969, and before April 1, 1972, amounts which would be so considered but for the fact the obligations were issued after May 27, 1969,”, substituting in subpar. (B), “the payment of interest on an original issue discount obligation, an amount equal to the original issue discount accrued on such obligation since the last payment of interest thereon (except that such original issue discount shall be taken into account under this subparagraph only to the extent that the tax thereon does not exceed the interest payment less the tax imposed by paragraph (1) thereon), and” for “bonds or other evidences of indebtedness issued after March 31, 1972, and payable more than 6 months from the date of original issue (without regard to the period held by the taxpayer), amounts which under section 1232(a)(2)(B) would be considered as ordinary income but for the fact such obligations were issued after May 27, 1969, and”, and striking out subpar. (C) which required that in the case of the payment of interest on an obligation described in subpar. (B), an amount equal to the original issue discount, but not in excess of such interest less the tax imposed by par. (1) thereon, accrued on such obligation since the last payment of interest thereon, be included for purpose of the 30 percent tax.
Subsec. (b). Pub. L. 98–369, § 130(a), amended subsec. (b) generally, substituting provision establishing an exception for certain Guam and Virgin Islands corporations for provision establishing an exception for Guam corporations.
Subsec. (c). Pub. L. 98–369, § 127(b)(1), as amended by Pub. L. 99–514, § 1899A(68), added subsec. (c). Former subsec. (c) redesignated (d).
Pub. L. 98–369, § 128(b)(2), amended subsec. (c) generally, substituting in heading “Cross reference” for “Doubling of tax” and inserting provision directing that for special rules for original issue discount, see section 871(g).
Subsec. (d). Pub. L. 98–369, § 127(b)(1), as amended by Pub. L. 99–514, § 1899A(68), redesignated subsec. (c) as (d).
1976—Subsec. (a)(3)(A), (B). Pub. L. 94–455 substituted “ordinary income” for “gain from the sale or exchange of property which is not a capital asset”.
1972—Subsecs. (b), (c). Pub. L. 92–606 added subsec. (b) and redesignated former subsec. (b) as (c).
1971—Subsec. (a)(1). Pub. L. 92–178, § 313(a), inserted “(other than original issue discount as defined in section 1232(b))” after “interest”.
Subsec. (a)(3). Pub. L. 92–178, § 313(c), designated existing provisions as subpar. (A), inserted “and before April 1, 1972,” after “September 28, 1965,”, substituted “section 1232(a)(2)(B)” for “section 1232”, and inserted “, in the case of corporate obligations issued after May 27, 1969, and before April 1, 1972, amounts which would be so considered but for the fact that the obligations were issued after May 27, 1969,”, and added subpars. (B) and (C).
1966—Subsec. (a). Pub. L. 89–809 substantially revised the income tax treatment of foreign corporations, substituted the concept of amounts received from sources within the United States by foreign corporations but not effectively connected with the conduct of a trade or business within the United States for the concept of amounts received from sources within the United States by foreign corporations not engaged in trade or business within the United States as the amount upon which the existing 30 percent levy should be imposed, and added contingent income received from the sale of patents and other intangibles and amounts of original issue discount which are treated as ordinary income received on retirement or sale or exchange of bonds or other evidences of indebtedness issued after Sept. 28, 1965, to the specified types of fixed or determinable income.
Amendment by section 411(a)(2) of Pub. L. 108–357 applicable to dividends with respect to taxable years of regulated investment companies beginning after Dec. 31, 2004, see section 411(d)(1) of Pub. L. 108–357, set out as a note under section 871 of this title.
Pub. L. 108–357, title IV, § 420(d), Oct. 22, 2004, 118 Stat. 1514, provided that: “The amendments made by this section [amending this section and section 1442 of this title] shall apply to dividends paid after the date of the enactment of this Act [Oct. 22, 2004].”
Amendment by section 1211(b)(6) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, except as otherwise provided, see section 1211(c) of Pub. L. 99–514, set out as an Effective Date note under section 865 of this title.
Amendment by section 1214(c)(2) of Pub. L. 99–514 applicable to payments made in taxable year of payor beginning after Dec. 31, 1986, except as otherwise provided, see section 1214(d) of Pub. L. 99–514, as amended, set out as a note under section 861 of this title.
Amendment by section 1223(b)(2) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 1223(c) of Pub. L. 99–514, set out as a note under section 864 of this title.
Amendment by section 1273(b)(1), (2)(A) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain exceptions and qualifications, see section 1277 of Pub. L. 99–514, set out as a note under section 931 of this title.
Amendment by section 1810(d)(1)(B), (3)(C), (e)(2)(B) of Pub. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title.
Amendment by section 42(a)(10) of Pub. L. 98–369 applicable to taxable years ending after July 18, 1984, see section 44 of Pub. L. 98–369, set out as an Effective Date note under section 1271 of this title.
Amendment by section 127(b) of Pub. L. 98–369 applicable to interest received after July 18, 1984, with respect to obligations issued after such date, in taxable years after such date, see section 127(g)(1) of Pub. L. 98–369, set out as a note under section 871 of this title.
Amendment by section 128(b) of Pub. L. 98–369 applicable to payments made on or after the 60th day after July 18, 1984, with respect to obligations issued after Mar. 31, 1972, see section 128(d)(1) of Pub. L. 98–369, set out as a note under section 871 of this title.
Pub. L. 98–369, div. A, title I, § 130(d), July 18, 1984, 98 Stat. 661, provided that: “The amendments made by this section [amending this section and sections 1442 and 7651 of this title] shall apply to payments made after March 1, 1984, in taxable years ending after such date.”
Pub. L. 92–606, § 2, Oct. 31, 1972, 86 Stat. 1497, provided in part that: “The amendments made by section 1(e)(1) [amending this section] shall apply with respect to taxable years beginning after December 31, 1971.”
Amendment by Pub. L. 92–178 applicable with respect to taxable years beginning after Dec. 31, 1966, see section 313(f) of Pub. L. 92–178, set out as a note under section 871 of this title.
For nonapplication of amendments by sections 1211(b)(6) and 1214(c)(2) of Pub. L. 99–514 to the extent application of such amendments would be contrary to any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes 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.