26 U.S.C. § 898 — Taxable year of certain foreign corporations

(a) General rule. For this title, the taxable year^* of a specified foreign corporation^* is the required year determined under subsection (c).

(b) Specified foreign corporation. For this section—

(1) In general. A “specified foreign corporation” is a foreign corporation that (A) is treated as a controlled foreign corporation^* for any purpose under subpart F of part III of this subchapter, and (B) meets the ownership requirements in paragraph (2).

(2) Ownership requirements. (A) General rule. These requirements are met for a foreign corporation if, on each testing day, a United States shareholder^* owns more than 50 percent of either (i) the total voting power of all voting stock^* classes, or (ii) the total value of all stock classes.

(B) Ownership. To determine ownership under subparagraph (A), subsections (a) and (b) of section 958 apply.

(3) United States shareholder. “United States shareholder” has the meaning in section 951(b). But for a foreign corporation with related person insurance income as defined in section 953(c)(2), the Secretary^* may treat a person as a United States shareholder for this section if section 953(c)(1) treats that person as one.

(c) Determination of required year. (1) In general. The required year is (A) the majority U.S. shareholder year, or (B), if there is no majority U.S. shareholder year, the taxable year prescribed by regulations.

(2) Majority U.S. shareholder year. (A) In general. This means any taxable year that, on each testing day, was the taxable year of (i) every United States shareholder described in subsection (b)(2)(A), and (ii) every United States shareholder not described in clause (i) whose stock was treated under subsection (b)(2)(B) as owned by a shareholder described in clause (i).

(B) Testing day. The testing days are (i) the first day of the corporation's taxable year, determined without this section, or (ii) the days in a representative period that the Secretary prescribes.