26 U.S.C. § 91 — Certain foreign branch losses transferred to specified 10-percent owned foreign corporationstransferred

submitted 9 years ago by Pub. L. 115-97 to r/title-26-INTERNAL-REVENUE-CODE · 338 words · no verdicts yet

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A company transferring foreign branch assets to a related foreign corporation must report past branch losses as income. The reportable amount is losses since 2017 minus later branch income and certain recognized gains. This income counts as U.S.-source income, and the company's stock basis is adjusted to match.

(a) If a domestic corporation transfers substantially all the assets of a foreign branch to a specified 10-percent-owned foreign corporation (as defined in section 245A) that it is a United States shareholder of after the transfer, the domestic corporation must include in its gross income, for the year of the transfer, an amount equal to the "transferred loss amount." (b) The "transferred loss amount" is the excess, if any, of: the foreign branch's losses incurred after December 31, 2017 and before the transfer, for which the taxpayer was allowed a deduction; over the branch's taxable income for years after the loss year through the transfer year, plus any amount recognized under section 904(f)(3) because of the transfer. (c) The transferred loss amount is reduced, but not below zero, by any gain the taxpayer recognizes because of the transfer, other than amounts already counted under subsection (b)(2)(B). (d) Amounts included in gross income under this section are treated as U.S.-source income. (e) Under regulations or other guidance the Secretary prescribes, proper adjustments must be made to the taxpayer's basis in the stock of the foreign corporation the assets were transferred to, and to that corporation's basis in the transferred property, to reflect the amounts included in gross income under this section.

the actual law source: uscode.house.gov ↗public domain

(a) In general

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) Transferred loss amount

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.

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) Source of income

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

(e) Basis adjustments

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.

Source credit: (Added Pub. L. 115–97, title I, § 14102(d)(1), Dec. 22, 2017, 131 Stat. 2193.)

history & why it existsrecord from the source credit

2017Enacted · Pub. L. 115-97 · 131 Stat. 2193

A history note hasn’t been published yet. The record shows enactment by Pub. L. 115-97 on 2017-12-22.

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