Source: https://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title26-chapter1-subchapterP-part6&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGUyNi1zZWN0aW9uMTI5Nw%3D%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim
Timestamp: 2020-04-05 12:57:00
Document Index: 320438461

Matched Legal Cases: ['§1122', '§1291', '§1235', '§1012', '§6127', '§1122', '§6011', '§542', '§413', '§521', '§301', '§14301', '§401', '§542', '§413', '§413', '§542', '§1122', '§1122', '§1012', '§1012', '§1012', '§1012', '§6127', '§1012', '§6127', '§6127', '§1012', '§1012', '§1012', '§521', '§1235', '§1235', '§1012', '§13231', '§1122', '§14301', '§14301', '§1012', '§1294', '§1235', '§1012', '§413', '§1012', '§1295', '§1235', '§1012', '§6127', '§6127', '§6127', '§1012', '§1122', '§542', '§542', '§1122', '§1297', '§1235', '§1296', '§1012', '§13231', '§1704', '§1297', '§1121', '§6011', '§11', '§14501', '§14501', '§14501', '§11', '§11', '§1123', '§1123', '§13231', '§1018', '§1012', '§1012', '§1012', '§1012', '§1012', '§14501', '§1704', '§1235', '§1297', '§1012', '§7811', '§13231', '§1501', '§1298', '§1122', '§6011', '§11', '§521', '§401', '§401', '§11', '§1501', '§1703', '§7811']

[USC02] 26 USC Subtitle A, CHAPTER 1, Subchapter P, PART VI: TREATMENT OF CERTAIN PASSIVE FOREIGN INVESTMENT COMPANIES
<< Previous TITLE 26 / Subtitle A / CHAPTER 1 / Subchapter P / PART VI Next >>
26 USC Subtitle A, CHAPTER 1, Subchapter P, PART VI: TREATMENT OF CERTAIN PASSIVE FOREIGN INVESTMENT COMPANIES
PART VI—TREATMENT OF CERTAIN PASSIVE FOREIGN INVESTMENT COMPANIES
Interest on tax deferral.
Treatment of qualified electing funds.
Election of mark to market for marketable stock.
1997—Pub. L. 105–34, title XI, §1122(d)(6), Aug. 5, 1997, 111 Stat. 977, added items for subparts C and D and struck out former item for subpart C "General provisions".
Subpart A—Interest on Tax Deferral
§1291. Interest on tax deferral
(A) the amount of the excess distribution shall be allocated ratably to each day in the taxpayer's holding period for the stock,
(B) with respect to such excess distribution, the taxpayer's gross income for the current year shall include (as ordinary income) only the amounts allocated under subparagraph (A) to—
(ii) any period in the taxpayer's holding period before the 1st day of the 1st taxable year of the company which begins after December 31, 1986, and for which it was a passive foreign investment company, and
The taxpayer's holding period shall be determined under section 1223; except that—
The term "current year" means the taxable year in which the excess distribution or disposition occurs.
For purposes of this section, the term "excess distribution" means any distribution in respect of stock received during any taxable year to the extent such distribution does not exceed its ratable portion of the total excess distribution (if any) for such taxable year.
The term "total excess distribution" means the excess (if any) of—
(ii) 125 percent of the average amount received in respect of such stock by the taxpayer during the 3 preceding taxable years (or, if shorter, the portion of the taxpayer's holding period before the taxable year).
The total excess distributions with respect to any stock shall be zero for the taxable year in which the taxpayer's holding period in such stock begins.
(D) if the taxpayer's holding period includes periods during which the stock was held by another person, distributions received by such other person shall be taken into account as if received by the taxpayer,
The term "deferred tax amount" means, with respect to any distribution or disposition to which subsection (a) applies, an amount equal to the sum of—
For purposes of this subsection, the term "due date" means the date prescribed by law (determined without regard to extensions) for filing the return of the tax imposed by this chapter for the taxable year.
(B) which includes any portion of the taxpayer's holding period.
Except as provided in section 1296(j), this section also shall not apply if an election under section 1296(k) is in effect for the taxpayer's taxable year. In the case of stock which is marked to market under section 475 or any other provision of this chapter, this section shall not apply, except that rules similar to the rules of section 1296(j) shall apply.
For purposes of clause (i), the term "post-1986 earnings and profits" means earnings and profits which were accumulated in taxable years of such company beginning after December 31, 1986, and during the period or periods the stock was held by the taxpayer while the company was a passive foreign investment company.
(ii) the taxpayer's holding period in such stock shall be treated as beginning on the first day referred to in such subparagraph.
Except to the extent inconsistent with the regulations prescribed under subsection (f), rules similar to the rules of subsections (c), (d), and (e) of section 1246 (as in effect on the day before the date of the enactment of the American Jobs Creation Act of 2004) shall apply for purposes of this section; except that—
(1) the reduction under subsection (e) of such section shall be the excess of the basis determined under section 1014 over the adjusted basis of the stock immediately before the decedent's death, and
(B) the excess distribution taxes shall be allocated ratably to each day in the taxpayer's holding period for the stock, and
The term "creditable foreign taxes" means, with respect to any distribution, any withholding tax imposed with respect to such distribution, but only if the taxpayer chooses the benefits of section 901 and such taxes are creditable under section 901 (determined without regard to paragraph (1)(C)(ii)).
The term "excess distribution taxes" means, with respect to any distribution, the portion of the creditable foreign taxes with respect to such distribution which is attributable (on a pro rata basis) to the portion of such distribution which is an excess distribution.
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2566; amended Pub. L. 100–647, title I, §1012(p)(1), (3), (6), (7), (9), (12)–(14), (28), (31), (33), title VI, §6127(b), Nov. 10, 1988, 102 Stat. 3515–3517, 3520, 3521, 3715; Pub. L. 105–34, title XI, §1122(b), Aug. 5, 1997, 111 Stat. 976; Pub. L. 105–206, title VI, §6011(c)(2), July 22, 1998, 112 Stat. 818; Pub. L. 107–16, title V, §542(e)(5)(B), June 7, 2001, 115 Stat. 85; Pub. L. 108–357, title IV, §413(c)(24), Oct. 22, 2004, 118 Stat. 1509; Pub. L. 111–147, title V, §521(b), Mar. 18, 2010, 124 Stat. 112; Pub. L. 111–312, title III, §301(a), Dec. 17, 2010, 124 Stat. 3300; Pub. L. 115–97, title I, §14301(c)(34), Dec. 22, 2017, 131 Stat. 2224; Pub. L. 115–141, div. U, title IV, §401(a)(183), Mar. 23, 2018, 132 Stat. 1193.)
2018—Subsec. (e). Pub. L. 115–141 substituted "subsections (c), (d), and (e)" for "subsections (c) and (d) (e)," in introductory provisions.
2017—Subsec. (g)(2)(A). Pub. L. 115–97 substituted "any distribution, any withholding tax imposed with respect to such distribution, but only if" for "any distribution—
"(i) any foreign taxes deemed paid under section 902 with respect to such distribution, and
"(ii) any withholding tax imposed with respect to such distribution,
but only if".
2010—Subsec. (e). Pub. L. 111–312, which directed that subsec. (e) be amended to read as if amendment by Pub. L. 107–16, §542(e)(5)(B), had never been enacted, was executed by inserting "(e)," after "subsections (c) and (d)" and substituting "; except that—" and pars. (1) and (2) for the period at end. See 2001 Amendment note below.
Pub. L. 111–147 substituted "and (d)" for ", (d), and (f)".
2004—Subsec. (b)(3)(F). Pub. L. 108–357, §413(c)(24)(A), substituted "959(a)" for "551(d), 959(a),".
Subsec. (e). Pub. L. 108–357, §413(c)(24)(B), inserted "(as in effect on the day before the date of the enactment of the American Jobs Creation Act of 2004)" after "section 1246" in introductory provisions.
2001—Subsec. (e). Pub. L. 107–16, §542(e)(5)(B), struck out "(e)," after "subsections (c), (d)," and substituted period at end for "; except that—
"(1) the reduction under subsection (e) of such section shall be the excess of the basis determined under section 1014 over the adjusted basis of the stock immediately before the decedent's death, and
"(2) such a reduction shall not apply in the case of a decedent who was a nonresident alien at all times during his holding period in the stock."
1998—Subsec. (d)(1). Pub. L. 105–206 inserted at end "In the case of stock which is marked to market under section 475 or any other provision of this chapter, this section shall not apply, except that rules similar to the rules of section 1296(j) shall apply."
1997—Subsec. (a)(3)(A). Pub. L. 105–34, §1122(b)(3), amended heading and text of subpar. (A) generally. Prior to amendment, text read as follows: "The taxpayer's holding period shall be determined under section 1223; except that, for purposes of applying this section to an excess distribution, such holding period shall be treated as ending on the date of such distribution."
Subsec. (d). Pub. L. 105–34, §1122(b)(2), substituted "subparts B and C" for "subpart B" in heading.
1988—Subsec. (a)(1)(B)(ii). Pub. L. 100–647, §1012(p)(12), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "any period in the taxpayer's holding period before the 1st day of the 1st taxable year of the company for which it was a passive foreign investment company (or, if later, January 1, 1987), and".
Subsec. (a)(3)(A). Pub. L. 100–647, §1012(p)(14), substituted "for purposes of applying this section to" for "in the case of".
Subsec. (b)(2)(A). Pub. L. 100–647, §1012(p)(13), inserted at end "For purposes of clause (ii), any excess distribution received during such 3-year period shall be taken into account only to the extent it was included in gross income under subsection (a)(1)(B)."
Subsec. (c)(1). Pub. L. 100–647, §1012(p)(31), inserted at end "Any increase in the tax imposed by this chapter for the current year under subsection (a) to the extent attributable to the amount referred to in subparagraph (B) shall be treated as interest paid under section 6601 on the due date for the current year."
Subsec. (d)(1). Pub. L. 100–647, §6127(b)(1), inserted "with respect to the taxpayer" after "qualified electing fund".
Pub. L. 100–647, §1012(p)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "This section shall not apply with respect to—
"(A) any distribution paid by a passive foreign investment company during a taxable year for which such company is a qualified electing fund, and
"(B) any disposition of stock in a passive foreign investment company if such company is a qualified electing fund for each of its taxable years—
"(i) which begins after December 31, 1986, and for which such company is a passive foreign investment company, and
"(ii) which includes any portion of the taxpayer's holding period."
Subsec. (d)(2)(A)(i). Pub. L. 100–647, §6127(b)(2), inserted "with respect to the taxpayer" after "qualified electing fund".
Subsec. (d)(2)(B)(i)(I). Pub. L. 100–647, §6127(b)(2), inserted "with respect to the taxpayer" after "qualified electing fund".
Subsec. (e). Pub. L. 100–647, §1012(p)(6)(B), substituted "Except to the extent inconsistent with the regulations prescribed under subsection (f), rules similar".
Subsec. (e)(2). Pub. L. 100–647, §1012(p)(9), struck out "not" before "a nonresident".
Subsec. (f). Pub. L. 100–647, §1012(p)(6)(A), amended subsec. (f) generally. Prior to amendment, subsec. (f), "Nonrecognition provisions", read as follows: "To the extent provided in regulations, gain shall be recognized on any disposition of stock in a passive foreign investment company."
Pub. L. 111–147, title V, §521(c), Mar. 18, 2010, 124 Stat. 112, provided that: "The amendments made by this section [amending this section and section 1298 of this title] take effect on the date of the enactment of this Act [Mar. 18, 2010]."
Amendment by section 1012(p)(1), (3), (6), (7), (9), (12)–(14), (28), (31), (33) of 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.
Amendment by section 6127(b) of Pub. L. 100–647 effective as if included in the amendments made by section 1235 of Pub. L. 99–514, see section 6127(c)(1) of Pub. L. 100–647, set out as a note under section 1295 of this title.
Pub. L. 99–514, title XII, §1235(h), Oct. 22, 1986, 100 Stat. 2576, provided that: "The amendments made by this section [enacting this section and sections 1293 to 1297 of this title and amending sections 532, 542, 551, 851, 904, 951, 1246, and 6503 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 1986."
Subpart B—Treatment of Qualified Electing Funds
Current taxation of income from qualified electing funds.
Election to extend time for payment of tax on undistributed earnings.
Qualified electing fund.
The basis of the taxpayer's stock in a passive foreign investment company shall be—
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2569; amended Pub. L. 100–647, title I, §1012(p)(15), (18), (23), (32), Nov. 10, 1988, 102 Stat. 3518, 3519, 3521; Pub. L. 103–66, title XIII, §13231(c)(3), Aug. 10, 1993, 107 Stat. 498; Pub. L. 105–34, title XI, §1122(d)(3), Aug. 5, 1997, 111 Stat. 977; Pub. L. 115–97, title I, §14301(c)(35), Dec. 22, 2017, 131 Stat. 2224.)
Section 902 (as in effect before its repeal), referred to in subsec. (f)(3), means section 902 of this title as in effect before its repeal by Pub. L. 115–97, title I, §14301(a), Dec. 22, 2017, 131 Stat. 2221.
2017—Subsec. (f)(3). Pub. L. 115–97 added par. (3).
1997—Subsecs. (a)(1), (d). Pub. L. 105–34 substituted "section 1298(a)" for "section 1297(a)".
1993—Subsec. (c). Pub. L. 103–66 inserted at end "If the passive foreign investment company is a controlled foreign corporation (as defined in section 957(a)), the preceding sentence shall not apply to any United States shareholder (as defined in section 951(b)) in such corporation, and, in applying section 959 to any such shareholder, any inclusion under this section shall be treated as an inclusion under section 951(a)(1)(A)."
1988—Subsec. (b). Pub. L. 100–647, §1012(p)(15), inserted at end "To the extent provided in regulations, if the fund establishes to the satisfaction of the Secretary that it uses a shorter period than the taxable year to determine shareholders' interests in the earnings of such fund, pro rata shares may be determined by using such shorter period."
§1294. Election to extend time for payment of tax on undistributed earnings
(2) Election not permitted where amounts otherwise includible under section 951
The taxpayer may not make an election under paragraph (1) with respect to the undistributed PFIC earnings tax liability attributable to a qualified electing fund for the taxable year if any amount is includible in the gross income of the taxpayer under section 951 with respect to such fund for such taxable year.
The term "undistributed PFIC earnings tax liability" means, in the case of any taxpayer, the excess of—
The term "undistributed earnings" means, with respect to any qualified electing fund, the excess (if any) of—
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2570; amended Pub. L. 100–647, title I, §1012(p)(4), (8), (25), (34), Nov. 10, 1988, 102 Stat. 3515, 3517, 3519, 3522; Pub. L. 108–357, title IV, §413(c)(25), Oct. 22, 2004, 118 Stat. 1509.)
2004—Subsec. (a)(2). Pub. L. 108–357 amended heading and text of par. (2) generally. Prior to amendment, text read as follows: "The taxpayer may not make an election under paragraph (1) with respect to the undistributed PFIC earnings tax liability attributable to a qualified electing fund for the taxable year if—
"(A) any amount is includible in the gross income of the taxpayer under section 551 with respect to such fund for such taxable year, or
"(B) any amount is includible in the gross income of the taxpayer under section 951 with respect to such fund for such taxable year."
1988—Subsec. (c)(2). Pub. L. 100–647, §1012(p)(4), (34), substituted "Transfers" for "Dispositions" in heading and "is transferred" for "is disposed of" in subpar. (A), and in closing provisions substituted "such transfer" for "such disposition" in two places and inserted at end "To the extent provided in regulations, the preceding sentence shall not apply in the case of a transfer in a transaction with respect to which gain or loss is not recognized (in whole or in part), and the transferee in such transaction shall succeed to the treatment under this section of the transferor."
§1295. Qualified electing fund
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2571; amended Pub. L. 100–647, title I, §1012(p)(37)(A), title VI, §6127(a), Nov. 10, 1988, 102 Stat. 3522, 3715.)
1988—Subsec. (a). Pub. L. 100–647, §6127(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: "For purposes of this part, the term 'qualified electing fund' means any passive foreign investment company if—
"(1) an election under subsection (b) applies to such company for the taxable year, and
"(2) such company complies for such taxable year with such requirements as the Secretary may prescribe for purposes of—
"(A) determining the ordinary earnings and net capital gain of such company for the taxable year,
"(B) ascertaining the ownership of its outstanding stock, and
"(C) otherwise carrying out the purposes of this subpart."
"(1) In general.—A passive foreign investment company may make an election under this subsection for any taxable year. Such an election, once made, shall apply to all subsequent taxable years of such company for which such company is a passive foreign investment company unless revoked with the consent of the Secretary.
"(2) When made.—An election under this subsection may be made for any taxable year at any time before the 15th day of the 3rd month of the following taxable year. To the extent provided in regulations, such an election may be made later than as required by the preceding sentence in cases where the company failed to make a timely election because it reasonably believed it was not a passive foreign investment company."
Amendment by section 1012(p)(37)(A) of 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.
Pub. L. 100–647, title VI, §6127(c), Nov. 10, 1988, 102 Stat. 3715, provided that:
"(1) In general.—The amendments made by this section [amending this section and section 1291 of this title] shall take effect as if included in the amendments made by section 1235 of the Reform Act [Pub. L. 99–514].
"(2) Time for making election.—The period during which an election under section 1295(b) of the 1986 Code may be made shall in no event expire before the date 60 days after the date of the enactment of this Act [Nov. 10, 1988]."
Pub. L. 100–647, title I, §1012(p)(37)(B), Nov. 10, 1988, 102 Stat. 3522, provided that: "The period during which an election under section 1295(b) of the 1986 Code may be made shall in no event expire before the date 60 days after the date of enactment of this Act [Nov. 10, 1988]."
Subpart C—Election of Mark to Market for Marketable Stock
1997—Pub. L. 105–34, title XI, §1122(a), Aug. 5, 1997, 111 Stat. 972, added subpart C and item 1296. Former subpart C redesignated D.
A prior subpart C, consisting of sections 1296 and 1297 of this title, was redesignated subpart D consisting of sections 1297 and 1298.
For purposes of this section, the term "unreversed inclusions" means, with respect to any stock in a passive foreign investment company, the excess (if any) of—
The term "marketable stock" means—
If the taxpayer elects the application of this section with respect to any marketable stock in a corporation after the beginning of the taxpayer's holding period in such stock, and if the requirements of subparagraph (B) are not satisfied, section 1291 shall apply to—
If a regulated investment company elects the application of this section with respect to any marketable stock in a corporation after the beginning of the taxpayer's holding period in such stock, then, with respect to such company's first taxable year for which such company elects the application of this section with respect to such stock—
2010—Subsec. (i). Pub. L. 111–312 amended subsec. (i) to read as if amendment by Pub. L. 107–16, §542(e)(5)(C), had never been enacted. See 2001 Amendment note below.
2004—Subsec. (h). Pub. L. 108–311 substituted "section 851(b)(2)" for "paragraphs (2) and (3) of section 851(b)".
2001—Subsec. (i). Pub. L. 107–16, §542(e)(5)(C), struck out subsec. (i). Text read as follows: "In the case of stock of a passive foreign investment company which is acquired by bequest, devise, or inheritance (or by the decedent's estate) and with respect to which an election under this section was in effect as of the date of the decedent's death, notwithstanding section 1014, the basis of such stock in the hands of the person so acquiring it shall be the adjusted basis of such stock in the hands of the decedent immediately before his death (or, if lesser, the basis which would have been determined under section 1014 without regard to this subsection)."
1998—Subsec. (d). Pub. L. 105–206 inserted at end "In the case of a regulated investment company which elected to mark to market the stock held by such company as of the last day of the taxable year preceding such company's first taxable year for which such company elects the application of this section, the amount referred to in paragraph (1) shall include amounts included in gross income under such mark to market with respect to such stock for prior taxable years."
1997—Pub. L. 105–34, title XI, §1122(a), (d)(5), Aug. 5, 1997, 111 Stat. 972, 977, redesignated subpart C of this part as this subpart and amended table of sections generally, renumbering items 1296 and 1297 as 1297 and 1298, respectively.
§1297. Passive foreign investment company
For purposes of this part, except as otherwise provided in this subpart, the term "passive foreign investment company" means any foreign corporation if—
Except as provided in paragraph (2), the term "passive income" means any income which is of a kind which would be foreign personal holding company income as defined in section 954(c).
Except as provided in regulations, the term "passive income" does not include any income—
(B) derived in the active conduct of an insurance business by a qualifying insurance corporation (as defined in subsection (f)),
For purposes of subparagraph (C), the term "related person" has the meaning given such term by section 954(d)(3) determined by substituting "foreign corporation" for "controlled foreign corporation" each place it appears in section 954(d)(3).
For purposes of this subsection, the term "qualified portion" means the portion of the shareholder's holding period—
(f) Qualifying insurance corporation
The term "qualifying insurance corporation" means, with respect to any taxable year, a foreign corporation—
(A) which would be subject to tax under subchapter L if such corporation were a domestic corporation, and
(B) the applicable insurance liabilities of which constitute more than 25 percent of its total assets, determined on the basis of such liabilities and assets as reported on the corporation's applicable financial statement for the last year ending with or within the taxable year.
(2) Alternative facts and circumstances test for certain corporations
(A) the percentage so determined for the corporation is at least 10 percent, and
(B) under regulations provided by the Secretary, based on the applicable facts and circumstances—
(i) the corporation is predominantly engaged in an insurance business, and
(ii) such failure is due solely to runoff-related or rating-related circumstances involving such insurance business.
(3) Applicable insurance liabilities
The term "applicable insurance liabilities" means, with respect to any life or property and casualty insurance business—
(i) loss and loss adjustment expenses, and
(ii) reserves (other than deficiency, contingency, or unearned premium reserves) for life and health insurance risks and life and health insurance claims with respect to contracts providing coverage for mortality or morbidity risks.
(B) Limitations on amount of liabilities
(i) as reported to the applicable insurance regulatory body in the applicable financial statement described in paragraph (4)(A) (or, if less, the amount required by applicable law or regulation), or
(ii) as determined under regulations prescribed by the Secretary.
(4) Other definitions and rules
(A) Applicable financial statement
The term "applicable financial statement" means a statement for financial reporting purposes which—
(i) is made on the basis of generally accepted accounting principles,
(ii) is made on the basis of international financial reporting standards, but only if there is no statement that meets the requirement of clause (i), or
(iii) except as otherwise provided by the Secretary in regulations, is the annual statement which is required to be filed with the applicable insurance regulatory body, but only if there is no statement which meets the requirements of clause (i) or (ii).
(B) Applicable insurance regulatory body
The term "applicable insurance regulatory body" means, with respect to any insurance business, the entity established by law to license, authorize, or regulate such business and to which the statement described in subparagraph (A) is provided.
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2572, §1296; amended Pub. L. 100–647, title I, §§1012(p)(2), (5), (16), (26), (27), 1018(u)(40), Nov. 10, 1988, 102 Stat. 3515, 3518-3520, 3592; Pub. L. 103–66, title XIII, §13231(d)(1), (3), Aug. 10, 1993, 107 Stat. 499; Pub. L. 104–188, title I, §1704(r)(1), Aug. 20, 1996, 110 Stat. 1887; renumbered §1297 and amended Pub. L. 105–34, title XI, §§1121, 1122(a), (d)(4), 1123, Aug. 5, 1997, 111 Stat. 971, 972, 977; Pub. L. 105–206, title VI, §6011(b)(1), (d), July 22, 1998, 112 Stat. 817, 818; Pub. L. 110–172, §11(a)(24)(A), (g)(18), Dec. 29, 2007, 121 Stat. 2486, 2491; Pub. L. 115–97, title I, §14501(a), (b), Dec. 22, 2017, 131 Stat. 2234.)
2017—Subsec. (b)(2)(B). Pub. L. 115–97, §14501(a), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "derived in the active conduct of an insurance business by a corporation which is predominantly engaged in an insurance business and which would be subject to tax under subchapter L if it were a domestic corporation,".
Subsec. (f). Pub. L. 115–97, §14501(b), added subsec. (f).
2007—Subsec. (b)(2)(D). Pub. L. 110–172, §11(g)(18), which directed amendment of subpar. (D) by striking out "foreign trade income of a FSC or", was executed by striking out "foreign trade income of an FSC or" before "export trade income" to reflect the probable intent of Congress.
Subsecs. (d) to (f). Pub. L. 110–172, §11(a)(24)(A), redesignated subsecs. (e) and (f) as (d) and (e), respectively, and struck out heading and text of former subsec. (d). Text read as follows: "For purposes of this part, the term 'passive foreign investment company' does not include any foreign investment company to which section 1247 applies."
Subsec. (a). Pub. L. 105–34, §1123(b)(2), struck out concluding provisions which read as follows: "In the case of a controlled foreign corporation (or any other foreign corporation if such corporation so elects), the determination under paragraph (2) shall be based on the adjusted bases (as determined for purposes of computing earnings and profits) of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary."
Subsec. (a)(2). Pub. L. 105–34, §1123(b)(1), substituted "(as determined in accordance with subsection (e))" for "(by value)".
1993—Subsec. (a). Pub. L. 103–66, §13231(d)(1), substituted in closing provisions "In the case of a controlled foreign corporation (or any other foreign corporation if such corporation so elects), the determination under paragraph (2) shall be based on the adjusted bases (as determined for purposes of computing earnings and profits) of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary." for "A foreign corporation may elect to have the determination under paragraph (2) based on the adjusted bases of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary."
1988—Subsec. (a). Pub. L. 100–647, §1018(u)(40), inserted a comma after "subpart".
Pub. L. 100–647, §1012(p)(27), inserted at end "A foreign corporation may elect to have the determination under paragraph (2) based on the adjusted bases of its assets in lieu of their value. Such an election, once made, may be revoked only with the consent of the Secretary."
Subsec. (b)(1). Pub. L. 100–647, §1012(p)(5), amended par. (1) generally. Prior to amendment, par. (1) read as follows: "Except as provided in paragraph (2), the term 'passive income' has the meaning given such term by section 904(d)(2)(A) without regard to the exceptions contained in clause (iii) thereof."
Subsec. (b)(2). Pub. L. 100–647, §1012(p)(26), substituted "Exceptions" for "Exception for certain banks and insurance companies" in heading, and inserted sentence at end defining "related person".
Subsec. (b)(2)(B). Pub. L. 100–647, §1012(p)(16), inserted "is predominantly engaged in an insurance business and which" after "a corporation which".
Subsec. (c). Pub. L. 100–647, §1012(p)(2), inserted "(directly or indirectly)" after "foreign corporation owns".
Pub. L. 115–97, title I, §14501(c), Dec. 22, 2017, 131 Stat. 2235, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2017."
Pub. L. 104–188, title I, §1704(r)(2), Aug. 20, 1996, 110 Stat. 1887, provided that: "The amendments made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 1235 of the Tax Reform Act of 1986 [Pub. L. 99–514]."
A corporation shall not be treated as a passive foreign investment company for the first taxable year such corporation has gross income (hereinafter in this paragraph referred to as the "start-up year") if—
(Added Pub. L. 99–514, title XII, §1235(a), Oct. 22, 1986, 100 Stat. 2573, §1297; amended Pub. L. 100–647, title I, §1012(p)(10), (17), (20), (22), (24), (35), (36), Nov. 10, 1988, 102 Stat. 3517–3519, 3522; Pub. L. 101–239, title VII, §7811(i)(4), Dec. 19, 1989, 103 Stat. 2410; Pub. L. 103–66, title XIII, §13231(d)(2), (4), Aug. 10, 1993, 107 Stat. 499; Pub. L. 104–188, title I, §§1501(b)(10), (11), 1703(i)(5), (6), Aug. 20, 1996, 110 Stat. 1826, 1876; renumbered §1298 and amended Pub. L. 105–34, title XI, §1122(a), (e), Aug. 5, 1997, 111 Stat. 972, 977; Pub. L. 105–206, title VI, §6011(b)(2), July 22, 1998, 112 Stat. 818; Pub. L. 110–172, §11(a)(24)(C), (f)(2), Dec. 29, 2007, 121 Stat. 2487, 2489; Pub. L. 111–147, title V, §521(a), Mar. 18, 2010, 124 Stat. 112; Pub. L. 115–141, div. U, title IV, §401(a)(184)–(186), (d)(1)(D)(viii)(III), Mar. 23, 2018, 132 Stat. 1193, 1207.)
2018—Subsec. (b)(5)(B). Pub. L. 115–141, §401(a)(184), substituted "section 951(c)" for "section 951(f)".
2007—Subsec. (a)(2)(B). Pub. L. 110–172, §11(a)(24)(C), substituted "Section 1297(d)" for "Section 1297(e)".
1998—Subsec. (a)(2)(B). Pub. L. 105–206 inserted at end "Section 1297(e) shall not apply in determining whether a corporation is a passive foreign investment company for purposes of this subparagraph."
1996—Subsec. (b)(9). Pub. L. 104–188, §1501(b)(10), substituted "section 951(a)(1)(B)" for "subparagraph (B) or (C) of section 951(a)(1)".
Subsec. (e). Pub. L. 104–188, §1703(i)(6), inserted "For purposes of this part—" after heading.
1989—Subsec. (b)(5). Pub. L. 101–239, §7811(i)(4)(A), substituted "where stock held" for "where held" in heading.