§91 — Title 26 Internal Revenue Code | U.S. Code

Summary

A U.S. corporation that moves almost all the assets of a foreign branch into a foreign company it owns 10-percent of must report a special amount called the "transferred loss amount" as taxable income in the year of the move. The transferred loss amount is the branch’s losses after December 31, 2017 that the company already deducted, minus any taxable income the branch earned after those losses up to the transfer and minus any amount recognized under section 904(f)(3). That amount is lowered (not below zero) by any gain the company recognized on the transfer. It is treated as U.S.-source income, and the company’s and the transferee’s tax bases must be adjusted under Treasury guidance.

Title 26, §91

Internal Revenue Code — Source: USLM XML via OLRC

(a)If a domestic corporation transfers substantially all of the assets of a foreign branch (within the meaning of section 367(a)(3)(C), as in effect before the date of the enactment of the Tax Cuts and Jobs Act) to a specified 10-percent owned foreign corporation (as defined in section 245A) with respect to which it is a United States shareholder after such transfer, such domestic corporation shall include in gross income for the taxable year which includes such transfer an amount equal to the transferred loss amount with respect to such transfer.

(b)For purposes of this section, the term “transferred loss amount” means, with respect to any transfer of substantially all of the assets of a foreign branch, the excess (if any) of—

(1)the sum of losses—

(A)which were incurred by the foreign branch after December 31, 2017, and before the transfer, and

(B)with respect to which a deduction was allowed to the taxpayer, over

(2)the sum of—

(A)any taxable income of such branch for a taxable year after the taxable year in which the loss was incurred and through the close of the taxable year of the transfer, and

(B)any amount which is recognized under section 904(f)(3) on account of the transfer.

(c)The transferred loss amount shall be reduced (but not below zero) by the amount of gain recognized by the taxpayer on account of the transfer (other than amounts taken into account under subsection (b)(2)(B)).

(d)Amounts included in gross income under this section shall be treated as derived from sources within the United States.

(e)Consistent with such regulations or other guidance as the Secretary shall prescribe, proper adjustments shall be made in the adjusted basis of the taxpayer’s stock in the specified 10-percent owned foreign corporation to which the transfer is made, and in the transferee’s adjusted basis in the property transferred, to reflect amounts included in gross income under this section.

Notes & Related Subsidiaries

Editorial Notes

References in Text

The date of the enactment of the Tax Cuts and Jobs Act, referred to in subsec. (a), probably means the date of enactment of title I of Pub. L. 115–97, which was approved Dec. 22, 2017. Prior versions of the bill that was enacted into law as Pub. L. 115–97 included such

Short Title

, but it was not enacted as part of title I of Pub. L. 115–97.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 115–97, title I, § 14102(d)(3), Dec. 22, 2017, 131 Stat. 2194, provided that: “The

Amendments

made by this subsection [enacting this section] shall apply to transfers after December 31, 2017.” Transition Rule Pub. L. 115–97, title I, § 14102(d)(4), Dec. 22, 2017, 131 Stat. 2194, provided that: “The amount of gain taken into account under section 91(c) of the Internal Revenue Code of 1986, as added by this subsection, shall be reduced by the amount of gain which would be recognized under section 367(a)(3)(C) (determined without regard to the

Amendments

made by subsection (e) [amending section 367 of this title]) with respect to losses incurred before January 1, 2018.”

§91 Certain foreign branch losses transferred to specified 10-percent owned foreign corporations

Summary

Title 26, §91

Notes & Related Subsidiaries

Editorial Notes

References in Text

Short Title

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Amendments

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