Internal Revenue Code:Sec. 853. Foreign tax credit allowed to shareholders

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Contents


Location in Internal Revenue Code


     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter M - Regulated Investment Companies and Real Estate
              Investment Trusts
          PART I - REGULATED INVESTMENT COMPANIES
        

Statute

    Sec. 853. Foreign tax credit allowed to shareholders
 
    (a) General rule
      A regulated investment company -
        (1) more than 50 percent of the value (as defined in section
      851(c)(4)) of whose total assets at the close of the taxable year
      consists of stock or securities in foreign corporations, and
        (2) which meets the requirements of section 852(a) for the
      taxable year,
    may, for such taxable year, elect the application of this section
    with respect to income, war profits, and excess profits taxes
    described in section 901(b)(1), which are paid by the investment
    company during such taxable year to foreign countries and
    possessions of the United States.
    (b) Effect of election
      If the election provided in subsection (a) is effective for a
    taxable year -
        (1) the regulated investment company -
          (A) shall not, with respect to such taxable year, be allowed
        a deduction under section 164(a) or a credit under section 901
        for taxes to which subsection (a) is applicable, and
          (B) shall be allowed as an addition to the dividends paid
        deduction for such taxable year the amount of such taxes;
        (2) each shareholder of such investment company shall -
          (A) include in gross income and treat as paid by him his
        proportionate share of such taxes, and
          (B) treat as gross income from sources within the respective
        foreign countries and possessions of the United States, for
        purposes of applying subpart A of part III of subchapter N, the
        sum of his proportionate share of such taxes and the portion of
        any dividend paid by such investment company which represents
        income derived from sources within foreign countries or
        possessions of the United States.
    (c) Notice to shareholders
      The amounts to be treated by the shareholder, for purposes of
    subsection (b)(2), as his proportionate share of -
        (1) taxes paid to any foreign country or possession of the
      United States, and
        (2) gross income derived from sources within any foreign
      country or possession of the United States,
    shall not exceed the amounts so designated by the company in a
    written notice mailed to its shareholders not later than 60 days
    after the close of its taxable year.
    (d) Manner of making election and notifying shareholders
      The election provided in subsection (a) and the notice to
    shareholders required by subsection (c) shall be made in such
    manner as the Secretary may prescribe by regulations.
    (e) Treatment of Certain Taxes Not Allowed as a Credit Under 
      Section 901.--This section shall not apply to any tax with respect to 
    which the regulated investment company is not allowed a credit under 
    section 901 by reason of subsection (k) or (l) of such section.
    (f) Cross references
          (1) For treatment by shareholders of taxes paid to foreign
        countries and possessions of the United States, see section
        164(a) and section 901.
          (2) For definition of foreign corporation, see section
        7701(a)(5).
 

Sources

    (Aug. 16, 1954, ch. 736, 68A Stat. 272; Pub. L. 88-272, title II,
    Sec. 229(a)(3), Feb. 26, 1964, 78 Stat. 99; Pub. L. 94-455, title
    XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L.
    99-514, title VI, Sec. 655(a)(3), Oct. 22, 1986, 100 Stat. 2299;
    Pub. L. 105-34, title X, Sec. 1053(b), Aug. 5, 1997, 111 Stat. 943;
    Pub. L. 105-206, title VI, Sec. 6010(k)(1), (2), July 22, 1998, 112
    Stat. 815.)
 

Miscellaneous

                                 AMENDMENTS
      2005 - P.L. 109-135, Section 403
      (aa) Amendments Related to Section 832 of the Act.--
            (1) Subsection (e) of section 853 is <<NOTE: 26 USC 
        853.>> amended to read as follows:
     ``(e) Treatment of Certain Taxes Not Allowed as a Credit Under 
     Section 901.--This section shall not apply to any tax with respect to 
     which the regulated investment company is not allowed a credit under 
     section 901 by reason of subsection (k) or (l) of such section.''.

      1998 - Subsec. (c). Pub. L. 105-206, Sec. 6010(k)(2), struck out
    at end ''Such notice shall also include the amount of such taxes
    which (without regard to the election under this section) would not
    be allowable as a credit under section 901(a) to the regulated
    investment company by reason of section 901(k).''
      Subsecs. (e), (f). Pub. L. 105-206, Sec. 6010(k)(1), added
    subsec. (e) and redesignated former subsec. (e) as (f).
      1997 - Subsec. (c). Pub. L. 105-34 inserted at end ''Such notice
    shall also include the amount of such taxes which (without regard
    to the election under this section) would not be allowable as a
    credit under section 901(a) to the regulated investment company by
    reason of section 901(k).''
      1986 - Subsec. (c). Pub. L. 99-514 substituted ''60 days'' for
    ''45 days''.
      1976 - Subsec. (d). Pub. L. 94-455 struck out ''or his delegate''
    after ''Secretary''.
      1964 - Subsec. (c). Pub. L. 88-272 substituted ''45 days'' for
    ''30 days''.
                      EFFECTIVE DATE OF 1998 AMENDMENT
      Amendment by Pub. L. 105-206 effective, except as otherwise
    provided, as if included in the provisions of the Taxpayer Relief
    Act of 1997, Pub. L. 105-34, to which such amendment relates, see
    section 6024 of Pub. L. 105-206, set out as a note under section 1
    of this title.
                      EFFECTIVE DATE OF 1997 AMENDMENT
      Section 1053(c) of Pub. L. 105-34 provided that: ''The amendments
    made by this section (amending this section and section 901 of this
    title) shall apply to dividends paid or accrued more than 30 days
    after the date of the enactment of this Act (Aug. 5, 1997).''
                      EFFECTIVE DATE OF 1986 AMENDMENT
      Amendment by Pub. L. 99-514 applicable to taxable years beginning
    after Oct. 22, 1986, see section 655(b) of Pub. L. 99-514, set out
    as a note under section 852 of this title.
                      EFFECTIVE DATE OF 1964 AMENDMENT
      Amendment by Pub. L. 88-272 applicable to taxable years of
    regulated investment companies ending on or after Feb. 26, 1964,
    see section 229(c) of Pub. L. 88-272, set out as a note under
    section 852 of this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 855, 901 of this title.
 

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