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

26 U.S.C. § 958

Rules for determining stock ownership

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(a) Direct and indirect ownership(1) General ruleFor purposes of this subpart (other than section 960), stock owned means—(A) stock owned directly, and(B) stock owned with the application of paragraph (2).(2) Stock ownership through foreign entities

For purposes of subparagraph (B) of paragraph (1), stock owned, directly or indirectly, by or for a foreign corporation, foreign partnership, or foreign trust or foreign estate (within the meaning of section 7701(a)(31)) shall be considered as being owned proportionately by its shareholders, partners, or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.

(3) Special rule for mutual insurance companies

For purposes of applying paragraph (1) in the case of a foreign mutual insurance company, the term “stock” shall include any certificate entitling the holder to voting power in the corporation.

(b) Constructive ownershipFor purposes of sections 951(b), 954(d)(3), 956(c)(2), and 957, section 318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder within the meaning of section 951(b), to treat a person as a related person within the meaning of section 954(d)(3), to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(c)(2), or to treat a foreign corporation as a controlled foreign corporation under section 957, except that—(1) In applying paragraph (1)(A) of section 318(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign estate) shall not be considered as owned by a citizen or by a resident alien individual.(2) In applying subparagraphs (A), (B), and (C) of section 318(a)(2), if a partnership, estate, trust, or corporation owns, directly or indirectly, more than 50 percent of the total combined voting power of all classes of stock entitled to vote of a corporation, it shall be considered as owning all the stock entitled to vote.(3) In applying subparagraph (C) of section 318(a)(2), the phrase “10 percent” shall be substituted for the phrase “50 percent” used in subparagraph (C).(4) Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.Paragraphs (1) and (4) shall not apply for purposes of section 956(c)(2) to treat stock of a domestic corporation as not owned by a United States shareholder.(Added Pub. L. 87–834, § 12(a), Oct. 16, 1962, 76 Stat. 1018; amended Pub. L. 88–554, § 4(b)(5), Aug. 31, 1964, 78 Stat. 763; Pub. L. 94–455, title X, § 1021(b), Oct. 4, 1976, 90 Stat. 1619; Pub. L. 104–188, title I, §§ 1703(i)(4), 1704(t)(7), Aug. 20, 1996, 110 Stat. 1876, 1887; Pub. L. 115–97, title I, §§ 14213(a), 14301(c)(31), Dec. 22, 2017, 131 Stat. 2217, 2224; Pub. L. 119–21, title VII, § 70353(a), July 4, 2025, 139 Stat. 209.)Editorial NotesAmendments

2025—Subsec. (b). Pub. L. 119–21, § 70353(a)(2), substituted “Paragraphs (1) and (4)” for “Paragraph (1)” in concluding provisions.

Subsec. (b)(4). Pub. L. 119–21, § 70353(a)(1), added par. (4).

2017—Subsec. (a)(1). Pub. L. 115–97, § 14301(c)(31), substituted “960” for “960(a)(1)” in introductory provisions.

Subsec. (b). Pub. L. 115–97, § 14213(a)(2), substituted “Paragraph (1)” for “Paragraphs (1) and (4)” in concluding provisions.

Subsec. (b)(4). Pub. L. 115–97, § 14213(a)(1), struck out par. (4) which read as follows: “Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.”

1996—Subsec. (a)(1). Pub. L. 104–188, § 1704(t)(7), substituted “section 960(a)(1)” for “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” in introductory provisions.

Subsec. (b). Pub. L. 104–188, § 1703(i)(4), substituted “956(c)(2)” for “956(b)(2)” wherever appearing in introductory and closing provisions.

1976—Subsec. (b). Pub. L. 94–455 inserted “956(b)(2)” after “purposes of sections 951(b), 954(d)(3),”, “to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2)” after “meaning of section 954(d)(3)” and “Paragraphs (1) and (4) shall not apply for purposes of section 956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder” following subpar. (4).

1964—Subsec. (b). Pub. L. 88–554 redesignated pars. (4) and (5) as (3) and (4), respectively, struck out former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for purposes of applying first sentence of subpars. (A) and (B), and subpar. (C)(i) of section 318(a)(2) of this title, and made amendments throughout subsec. (b) to conform to changes made in section 318 of this title by Pub. L. 88–554.

Statutory Notes and Related SubsidiariesEffective Date of 2025 Amendment

Amendment by Pub. L. 119–21 applicable to taxable years of foreign corporations beginning after Dec. 31, 2025, see section 70353(d) of Pub. L. 119–21, set out as an Effective Date note under section 951B of this title.

Effective Date of 2017 Amendment

Pub. L. 115–97, title I, § 14213(b), Dec. 22, 2017, 131 Stat. 2217, provided that: “The amendments made by this section [amending this section] shall apply to—“(1) the last taxable year of foreign corporations beginning before January 1, 2018, and each subsequent taxable year of such foreign corporations, and“(2) taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.”

Amendment by section 14301(c)(31) of Pub. L. 115–97 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 14301(d) of Pub. L. 115–97, set out as a note under section 78 of this title.

Effective Date of 1996 Amendment

Amendment by section 1703(i)(4) of Pub. L. 104–188 effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) of Pub. L. 104–188, set out as a note under section 39 of this title.

Effective Date of 1976 Amendment

Amendment by Pub. L. 94–455 applicable to taxable years of foreign corporations beginning after Dec. 31, 1975, and to taxable years of United States shareholders within which or with which such taxable years of such corporations end, see section 1021(c) of Pub. L. 94–455, set out as a note under section 956 of this title.

Effective Date of 1964 Amendment

Amendment by Pub. L. 88–554 effective Aug. 31, 1964, except that for purposes of sections 302 and 304 of this title, such amendments shall not apply to distributions in payment for stock acquisitions or redemptions, if such acquisitions or redemptions occurred before Aug. 31, 1964, see section 4(c) of Pub. L. 88–554, set out as a note under section 318 of this title.

Construction

Amendment by Pub. L. 119–21 not to be construed to create any inference with respect to the proper application of any provision of this title with respect to taxable years beginning before the taxable years to which such amendment applies, see section 70353(f) of Pub. L. 119–21, set out as a note under section 951B of this title.

Notes of Decisions
Cited in 9 cases (1 in the last 5 years), 1932–2025 · leading case: Helvering v. British-Am. Tobacco Co., 69 F.2d 528 (2d Cir. 1934).
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Helvering v. British-Am. Tobacco Co., 69 F.2d 528 (2d Cir. 1934). · cites it 5× “9 [26 USCA §§ 958,-985]). Section 1019 of the Revenue Act of 1924 (chapter 234, 43 Stat.”
Linn v. Chivatero, 714 F.2d 1278 (5th Cir. 1983). “§ 1563 and 26 U.S.C. § 958 ) including but not limited to records of International Marketing and Development Corporation.”
Ingram v. Bowers, 57 F.2d 65 (2d Cir. 1932). “244 ) and 1924 and 1926 (26 USCA § 958 (a) (4); § 119 (a) (3) of 1928, 26 USCA § 2119 (a) (3).”
Vondermuhll v. Helvering, 75 F.2d 656 (D.C. Cir. 1935). “Subdivision (a) (1) (A) of section 217 of that act (26 USCA § 958 (a) (1) (A) excepts from the gross income of a nonresident alien “interest on deposits with persons carrying on the banking business paid to persons not engaged in business within the United States and not having…”
Stallforth v. Helvering, 77 F.2d 548 (D.C. Cir. 1935). “Section 217 of the same act, 26 USCA § 958 (c) (3), provides: “(c) The following items of gross income shall be treated as income from sources without the United States: * * * (3) Compensation for labor or personal services performed without the United States.”
United States v. Clayton-Kennedy, 2 F. Supp. 233 (D. Maryland 1933). “title 26, § 958 (26 USCA § 958), defines what income of a nonresident alien shall be considered as income from sources within and without tho United States with allowance for deductions and allocation of items.”
Bankers' Trust Co. v. Florida East Coast Ry. Co., 8 F. Supp. 874 (S.D. Fla. 1934). “The two acts are vitally dissimilar in scope and purpose. The federal income tax is an all-embracing tax upon every sort of income subject to the federal power.”
Altria Grp., Inc. v. United States (E.D. Va. 2025). · cites it 2× “® Second, the Court will address the parties’ competing statutory arguments, which center around whether Congress’ repeal of 26 U.S.C. § 958 (b)(4) produces an absurd result that is incompatible with subpart F.”
Sugden v. Shaffer, 100 F.2d 457 (2d Cir. 1938). “We do not find it necessary to decide whether there was a provable claim against the bankrupt under § 1114(d) of the Revenue Act of 1926, 26 U.S.C.A. § 958 (c), and Article 49 of Regulations 43: arguendo we shall assume that it was not liable.”
— 26 U.S.C. § 958(a) — 1 case
Helvering v. British-Am. Tobacco Co., 69 F.2d 528 (2d Cir. 1934). “9 [26 USCA §§ 958,-985]). Section 1019 of the Revenue Act of 1924 (chapter 234, 43 Stat.”
— 26 U.S.C. § 958(c) — 1 case
Helvering v. British-Am. Tobacco Co., 69 F.2d 528 (2d Cir. 1934). “9 [26 USCA §§ 958,-985]). Section 1019 of the Revenue Act of 1924 (chapter 234, 43 Stat.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.