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Title 26 — Internal Revenue CodeRelease 119-73

§951B Amounts Included in Gross Income of Foreign Controlled United States Shareholders

Title 26 › Subtitle 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 › § 951B

Last updated Apr 6, 2026|Official source

Summary

Some foreign companies are mostly American-owned but escape the usual rules for controlled foreign corporations on a technicality. If you are a U.S. person who would own more than 50 percent of such a company under special ownership-counting rules, you are treated as a "foreign controlled United States shareholder." The tax rules that make shareholders of controlled foreign corporations pay U.S. tax on certain company income then apply to you in the same way, as if the company were a regular controlled foreign corporation. The Treasury Department can issue rules extending this treatment to other parts of the tax law, including reporting requirements, and covering companies that count as passive foreign investment companies.

Full Legal Text

Title 26, §951B

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the case of any foreign controlled United States shareholder of a foreign controlled foreign corporation—
(1)this subpart (other than section 951A, 951(b), and 957) shall be applied with respect to such shareholder (separately from, and in addition to, the application of this subpart without regard to this section)—
(A)by substituting “foreign controlled United States shareholder” for “United States shareholder” each place it appears therein, and
(B)by substituting “foreign controlled foreign corporation” for “controlled foreign corporation” each place it appears therein, and
(2)section 951A (and such other provisions of this subpart as provided by the Secretary) shall be applied with respect to such shareholder—
(A)by treating each reference to “United States shareholder” in such section as including a reference to such shareholder, and
(B)by treating each reference to “controlled foreign corporation” in such section as including a reference to such foreign controlled foreign corporation.
(b)For purposes of this section, the term “foreign controlled United States shareholder” means, with respect to any foreign corporation, any United States person which would be a United States shareholder with respect to such foreign corporation if—
(1)section 951(b) were applied by substituting “more than 50 percent” for “10 percent or more”, and
(2)section 958(b) were applied without regard to paragraph (4) thereof.
(c)For purposes of this section, the term “foreign controlled foreign corporation” means a foreign corporation, other than a controlled foreign corporation, which would be a controlled foreign corporation if section 957(a) were applied—
(1)by substituting “foreign controlled United States shareholders” for “United States shareholders”, and
(2)by substituting “section 958(b) (other than paragraph (4) thereof)” for “section 958(b)”.
(d)The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance—
(1)to treat a foreign controlled United States shareholder or a foreign controlled foreign corporation as a United States shareholder or as a controlled foreign corporation, respectively, for purposes of provisions of this title other than this subpart (including any reporting requirement), and
(2)with respect to the treatment of foreign controlled foreign corporations that are passive foreign investment companies (as defined in section 1297).

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 119–21, title VII, § 70353(d), July 4, 2025, 139 Stat. 210, provided that: “The

Amendments

made by this section [enacting this section and amending section 958 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 2025.”

Construction

Pub. L. 119–21, title VII, § 70353(f), July 4, 2025, 139 Stat. 210, provided that: “The

Amendments

made by this section [enacting this section and amending section 958 of this title] shall not be construed to create any inference with respect to the proper application of any provision of the Internal Revenue Code of 1986 with respect to taxable years beginning before the taxable years to which such

Amendments

apply.” Special Rule Pub. L. 119–21, title VII, § 70353(e), July 4, 2025, 139 Stat. 210, provided that: “(1) In general.—Except to the extent provided by the Secretary of the Treasury (or the Secretary’s delegate), the

Effective Date

of any amendment to the Internal Revenue Code of 1986 shall be applied by treating references to United States shareholders as including references to foreign controlled United States shareholders, and by treating references to controlled foreign corporations as including references to foreign controlled foreign corporations. “(2) Definitions.—Any term used in paragraph (1) which is used in subpart F of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986 (as amended by this section) shall have the meaning given such term in such subpart.”

Reference

Citations & Metadata

Citation

26 U.S.C. § 951B

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73