PRIA Logo™
Title 26, Internal Revenue CodeRelease 119-110

§951A Net Cfc Tested Income Included in Gross Income of United States Shareholders

Title 26 › Subtitle A — Income Taxes › CHAPTER 1 — NORMAL TAXES AND SURTAXES › Subchapter N — Tax Based on Income From Sources Within or Without the United States › PART III — INCOME FROM SOURCES WITHOUT THE UNITED STATES › Subpart F — Controlled Foreign Corporations › § 951A

Last updated Sep 22, 2026|Official source

Summary

If you are a U.S. owner of a controlled foreign company, you must add your "net CFC tested income" to your taxable income for the year. Net CFC tested income is your share of the company’s tested income minus your share of the company’s tested loss. Tested income means the company’s gross income after leaving out certain specific kinds of income (for example, income already taxed under subpart F, some foreign‑base company and insurance exceptions, related‑party dividends, and foreign oil and gas income) and then subtracting the deductions that go with that income. A tested loss is when those deductions are larger than that income. Your share is figured the same way the tax rules already figure shares for subpart F income. You count as a U.S. shareholder only if you owned stock in the company on any day of the year. A foreign company counts as a controlled foreign corporation if it was controlled at any time during the year. For many tax rules, this net amount is treated the same as subpart F income. The tax agency will make rules for applying it to other parts of the tax code when a company‑level calculation is needed. If you have net CFC tested income from several companies, a company with no tested income gets no part of the net amount; a company with tested income gets a share based on the ratio of your share of that company’s tested income to the total tested income used in the calculation.

Full Legal Text

Title 26, §951A

Internal Revenue Code, Source: USLM XML via OLRC

(a)In general
Each person who is a United States shareholder of any controlled foreign corporation for any taxable year of such United States shareholder shall include in gross income such shareholder’s net CFC tested income for such taxable year.
(b)Net CFC tested income
For purposes of this section
(1) In general
(2)Tested income; tested loss
For purposes of this section
(A) Tested income
(B)Tested loss
(i)In general
The term “tested loss” means, with respect to any controlled foreign corporation for any taxable year of such controlled foreign corporation, the excess (if any) of the amount described in subparagraph (A)(ii) over the amount described in subparagraph (A)(i).
(ii)Coordination with subpart F to deny double benefit of losses
section 952(c)(1)(A) shall be applied by increasing the earnings and profits of the controlled foreign corporation by the tested loss of such corporation.
(c)Determination of pro rata share, etc.
For purposes of this section
(1) In general
(2)Treatment as United States shareholder
A person shall be treated as a United States shareholder of a controlled foreign corporation for any taxable year of such person only if such person owns (within the meaning of section 958(a)) stock in such foreign corporation on any day in such taxable year.
(3)Treatment as controlled foreign corporation
A foreign corporation shall be treated as a controlled foreign corporation for any taxable year if such foreign corporation is a controlled foreign corporation at any time during such taxable year.
(d)Treatment as subpart F income for certain purposes
(1)In general
(A)Application
Except as provided in subparagraph (B), any net CFC tested income included in gross income under subsection (a) shall be treated in the same manner as an amount included under section 951(a)(1)(A) for purposes of applying section 168(h)(2)(B), 535(b)(10), 851(b), 904(h), 959, 961, 962, 993(a)(1)(E), 996(f)(1), 1248(b)(1), 1248(d)(1), 6501(e)(1)(C), 6654(d)(2)(D), and 6655(e)(4).
(B)Exception
The Secretary shall provide rules for the application of subparagraph (A) to other provisions of this title in any case in which the determination of subpart F income is required to be made at the level of the controlled foreign corporation.
(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.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2025—Pub. L. 119–21, § 70323(a)(3)(E)(i), substituted “Net CFC tested income” for “Global intangible low-taxed income” in section catchline. Subsec. (a). Pub. L. 119–21, § 70323(a)(1), substituted “net CFC tested income” for “global intangible low-taxed income”. Subsec. (b). Pub. L. 119–21, § 70323(a)(2), redesignated subsec. (c) as (b) and struck out former subsec. (b) defining “global intangible low-taxed income” and “net deemed tangible income return”. Subsec. (b)(1)(A). Pub. L. 119–21, § 70354(b)(1)(A), struck out “(determined for each taxable year of such controlled foreign corporation which ends in or with such taxable year of such United States shareholder)” after “such United States shareholder”. Subsec. (b)(1)(B). Pub. L. 119–21, § 70354(b)(1)(B), struck out “(determined for each taxable year of such controlled foreign corporation which ends in or with such taxable year of such United States shareholder)” before period at end. Subsec. (c). Pub. L. 119–21, § 70323(a)(2), redesignated subsec. (e) as (c). Former subsec. (c) redesignated (b). Subsec. (c)(1). Pub. L. 119–21, § 70354(b)(2)(A), substituted “determined under section 951(a)(3)” for “in which or with which the taxable year of the controlled foreign corporation ends”. Pub. L. 119–21, § 70323(a)(3)(B), substituted “subsections (b)(1)(A) and (b)(1)(B)” for “subsections (b), (c)(1)(A), and (c)(1)(B)”. Subsec. (c)(2). Pub. L. 119–21, § 70354(b)(2)(B), substituted “any day in such taxable year” for “the last day in the taxable year of such foreign corporation on which such foreign corporation is a controlled foreign corporation”. Subsec. (d). Pub. L. 119–21, § 70323(a)(3)(C)(i), substituted “net CFC tested income” for “global intangible low-taxed income” wherever appearing. Substitution was also made in heading of par. (2) of subsec. (d) to reflect the probable intent of Congress. Pub. L. 119–21, § 70323(a)(2), redesignated subsec. (f) as (d) and struck out former subsec. (d) which related to qualified business asset investment. Subsec. (d)(2)(B)(ii). Pub. L. 119–21, § 70323(a)(3)(C)(ii), substituted “subsection (b)(1)(A)” for “subsection (c)(1)(A)”. Subsec. (e). Pub. L. 119–21, § 70323(a)(2), redesignated subsec. (e) as (c). Subsec. (f). Pub. L. 119–21, § 70323(a)(2), redesignated subsec. (f) as (d). Subsec. (f)(1)(A). Pub. L. 119–21, § 70311(b)(3), substituted “904(h)” for “904(h)(1)”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2025 AmendmentAmendment by section 70311(b)(3) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70311(c) of Pub. L. 119–21, set out as a note under section 904 of this title. Amendment by section 70323(a)(1), (2), (3)(B), (C), (E)(i) of Pub. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Pub. L. 119–21, set out as a note under section 172 of this title. Amendment by section 70354(b) of Pub. L. 119–21 applicable to taxable years of foreign corporations beginning after Dec. 31, 2025, see section 70354(c) of Pub. L. 119–21, set out as a note under section 951 of this title.

Effective Date

Section applicable to taxable years of foreign corporations beginning after Dec. 31, 2017, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see section 14201(d) of Pub. L. 115–97, set out as an

Effective Date

of 2017 Amendment note under section 904 of this title.

Reference

Citations & Metadata

Citation

26 U.S.C. § 951A

Title 26, Internal Revenue Code

Last Updated

Sep 22, 2026

Release point: 119-110