26 USC 951A - Net CFC tested income included in gross income of United States shareholders

U.S Code last checked for updates: Aug 17, 2025

§ 951A.

Net CFC tested income included in gross income of United States shareholders

(a)

In general

(b)

Net CFC tested income

For purposes of this section—

(1)

In general

The term “net CFC tested income” means, with respect to any United States shareholder for any taxable year of such United States shareholder, the excess (if any) of—

(A)

the aggregate of such shareholder’s pro rata share of the tested income of each controlled foreign corporation with respect to which such shareholder is a United States shareholder for such taxable year of such United States shareholder, over

(B)

the aggregate of such shareholder’s pro rata share of the tested loss of each controlled foreign corporation with respect to which such shareholder is a United States shareholder for such taxable year of such United States shareholder .

(2)

Tested income; tested loss

For purposes of this section—

(A)

Tested income

The term “tested income” means, with respect to any controlled foreign corporation for any taxable year of such controlled foreign corporation, the excess (if any) of—

(i)

the gross income of such corporation determined without regard to—

(I)

any item of income described in section 952(b),

(II)

any gross income taken into account in determining the subpart F income of such corporation,

(III)

any gross income excluded from the foreign base company income (as defined in section 954) and the insurance income (as defined in section 953) of such corporation by reason of section 954(b)(4),

(IV)

any dividend received from a related person (as defined in section 954(d)(3)), and

(V)

any foreign oil and gas extraction income (as defined in section 907(c)(1)) of such corporation, over

(ii)

the deductions (including taxes) properly allocable to such gross income under rules similar to the rules of section 954(b)(5) (or to which such deductions would be allocable if there were such gross income).

(B)

Tested loss

(i)

In general

(ii)

Coordination with subpart F to deny double benefit of losses

(c)

Determination of pro rata share, etc.

For purposes of this section—

(1)

In general

(2)

Treatment as United States shareholder

(3)

Treatment as controlled foreign corporation

(d)

Treatment as subpart F income for certain purposes

(1)

In general

(A)

Application

(B)

Exception

(2)

Allocation of net CFC tested income to controlled foreign corporations

For purposes of the sections referred to in paragraph (1), with respect to any controlled foreign corporation any pro rata amount from which is taken into account in determining the net CFC tested income included in gross income of a United States shareholder under subsection (a), the portion of such net CFC tested income which is treated as being with respect to such controlled foreign corporation is—

(A)

in the case of a controlled foreign corporation with no tested income, zero, and

(B)

in the case of a controlled foreign corporation with tested income, the portion of such net CFC tested income which bears the same ratio to such net CFC tested income as—

(i)

such United States shareholder’s pro rata amount of the tested income of such controlled foreign corporation, bears to

(ii)

the aggregate amount described in subsection (b)(1)(A) with respect to such United States shareholder.

(Added Pub. L. 115–97, title I, § 14201(a), Dec. 22, 2017, 131 Stat. 2208; amended Pub. L. 119–21, title VII, §§ 70311(b)(3), 70323(a)(1), (2), (3)(B), (C), (E)(i), 70354(b), July 4, 2025, 139 Stat. 203, 205, 211.)

cite as: 26 USC 951A