r/title-26-INTERNAL-REVENUE-CODE wiki — defined terms

“depreciable personal property” applies in that section

The term “depreciable personal property” means any personal property if the adjusted basis of such property includes depreciation adjustments. (B) Depreciation adjustments

“depreciation adjustments” applies in that section

The term “depreciation adjustments” means adjustments reflected in the adjusted basis of any property on account of depreciation deductions (whether allowed with respect to such property or other property and whether allowed to the taxpayer or to any other person). (C) Depreciation deductions

“depreciation deductions” applies in that section

The term “depreciation deductions” means any deductions for depreciation or amortization or any other deduction allowable under any provision of this chapter which treats an otherwise capital expenditure as a deductible expense. (d) Exception for intangibles (1) In general In the case of any sale of an intangible— (A) this section shall apply only to the extent the payments in consideration of such sale are not contingent on the productivity, use, or disposition of the intangible, and (B) to the extent such payments are so contingent, the source of such payments shall be determined under this part in the same manner as if such payments were royalties.

“intangible” applies in that section

the term “intangible” means any patent, copyright, secret process or formula, goodwill, trademark, trade brand, franchise, or other like property. (3) Special rule in the case of goodwill To the extent this section applies to the sale of goodwill, payments in consideration of such sale shall be treated as from sources in the country in which such goodwill was generated.

“inventory property” applies in that section

The term “inventory property” means personal property described in paragraph (1) of section 1221(a). (2) Sale includes exchange

“nonresident” applies in that section

The term “nonresident” means any person other than a United States resident. (2) Special rules for United States citizens and resident aliens For purposes of this section, a United States citizen or resident alien shall not be treated as a nonresident with respect to any sale of personal property unless an income tax equal to at least 10 percent of the gain derived from such sale is actually paid to a foreign country with respect to that gain.

“sale” applies in that section

The term “sale” includes an exchange or any other disposition. (3) Treatment of possessions Any possession of the United States shall be treated as a foreign country. (4) Affiliate

“United States depreciation adjustments” applies in that section

The term “United States depreciation adjustments” means the portion of the depreciation adjustments to the adjusted basis of the property which are attributable to the depreciation deductions allowable in computing taxable income from sources in the United States.

“United States resident” applies in that section

The term “United States resident” means— (i) any individual who— (I) is a United States citizen or a resident alien and does not have a tax home (as defined in section 911(d)(3)) in a foreign country, or (II) is a nonresident alien and has a tax home (as so defined) in the United States, and (ii) any corporation, trust, or estate which is a United States person (as defined in section 7701(a)(30)). (B) Nonresident

“unprocessed timber” applies in that section

the term “unprocessed timber” means any log, cant, or similar form of timber. (c) Exception for depreciable personal property (1) In general Gain (not in excess of the depreciation adjustments) from the sale of depreciable personal property shall be allocated between sources in the United States and sources outside the United States— (A) by treating the same proportion of such gain as sourced in the United States as the United States depreciation adjustments with respect to such property bear to the total depreciation adjustments, and (B) by treating the remaining portion of such gain as sourced outside the United States.

“10-percent shareholder” applies in that section

The term “10-percent shareholder” means— (i) in the case of an obligation issued by a corporation, any person who owns 10 percent or more of the total combined voting power of all classes of stock of such corporation entitled to vote, or (ii) in the case of an obligation issued by a partnership, any person who owns 10 percent or more of the capital or profits interest in such partnership.

“active foreign business income” applies in that section

the term “active foreign business income” means gross income which— (I) is derived from sources outside the United States (as determined under this subchapter), and (II) is attributable to the active conduct of a trade or business in a foreign country or possession of the United States. (iii) Testing period For purposes of this subsection,

“active foreign business percentage” applies in that section

the term “active foreign business percentage” means, with respect to any existing 80/20 company, the percentage which— (A) the active foreign business income of such company for the testing period, is of (B) the gross income of such company for the testing period from all sources. (3) Aggregation rules For purposes of applying paragraph (1) (other than subparagraphs (A)(i) and (B)(iv) thereof) and paragraph (2)— (A) In general The corporation referred to in paragraph (1)(A) and all of such corporation’s subsidiaries shall be treated as one corporation. (B) Subsidiaries For purposes of subparagraph (A),

“aggregate reported amount” applies in that section

The term “aggregate reported amount” means the aggregate amount of dividends reported by the company under clause (i) as interest related dividends for the taxable year (including interest related dividends paid after the close of the taxable year described in section 855). (IV) Post-December reported amount

“deposits” applies in that section

the term “deposits” means amounts which are— (A) deposits with persons carrying on the banking business, (B) deposits or withdrawable accounts with savings institutions chartered and supervised as savings and loan or similar associations under Federal or State law, but only to the extent that amounts paid or credited on such deposits or accounts are deductible under section 591 (determined without regard to sections 265 and 291) in computing the taxable income of such institutions, and (C) amounts held by an insurance company under an agreement to pay interest thereon.

“dividend equivalent” applies in that section

the term “dividend equivalent” means— (A) any substitute dividend made pursuant to a securities lending or a sale-repurchase transaction that (directly or indirectly) is contingent upon, or determined by reference to, the payment of a dividend from sources within the United States, (B) any payment made pursuant to a specified notional principal contract that (directly or indirectly) is contingent upon, or determined by reference to, the payment of a dividend from sources within the United States, and (C) any other payment determined by the Secretary to be substantially similar to a payment described in subparagraph (A) or (B).

“excess reported amount” applies in that section

The term “excess reported amount” means the excess of the aggregate reported amount over the qualified net interest income of the company for the taxable year. (III) Aggregate reported amount

“existing 80/20 company” applies in that section

The term “existing 80/20 company” means any corporation if— (i) such corporation met the 80-percent foreign business requirements of section 861(c)(1) (as in effect before the date of the enactment of this subsection) for such corporation’s last taxable year beginning before January 1, 2011 , (ii) such corporation meets the 80-percent foreign business requirements of subparagraph (B) with respect to each taxable year after the taxable year referred to in clause (i), and (iii) there has not been an addition of a substantial line of business with respect to such corporation after the date of the enactment of this subsection.

“long party” applies in that section

The term “long party” means, with respect to any underlying security of any notional principal contract, any party to the contract which is entitled to receive any payment pursuant to such contract which is contingent upon, or determined by reference to, the payment of a dividend from sources within the United States with respect to such underlying security. (B) Short party

“original issue discount obligation” applies in that section

the term “original issue discount obligation” means any bond or other evidence of indebtedness having original issue discount (within the meaning of section 1273). (B) Exceptions The term “original issue discount obligation” shall not include— (i) Certain short-term obligations Any obligation payable 183 days or less from the date of original issue (without regard to the period held by the taxpayer). (ii) Tax-exempt obligations Any obligation the interest on which is exempt from tax under section 103 or under any other provision of law without regard to the identity of the holder.

“payment” applies in that section

the term “payment” includes any gross amount which is used in computing any net amount which is transferred to or from the taxpayer. (6) Prevention of over-withholding In the case of any chain of dividend equivalents one or more of which is subject to tax under subsection (a) or section 881, the Secretary may reduce such tax, but only to the extent that the taxpayer can establish that such tax has been paid with respect to another dividend equivalent in such chain, or is not otherwise due, or as the Secretary determines is appropriate to address the role of financial intermediaries in such chain. For purposes of this paragraph, a dividend shall be treated as a dividend equivalent.

“portfolio interest” applies in that section

the term “portfolio interest” means any interest (including original issue discount) which— (A) would be subject to tax under subsection (a) but for this subsection, and (B) is paid on an obligation— (i) which is in registered form, and (ii) with respect to which— (I) the United States person who would otherwise be required to deduct and withhold tax from such interest under section 1441(a) receives a statement (which meets the requirements of paragraph (5)) that the beneficial owner of the obligation is not a United States person, or (II) the Secretary has determined that such a statement is not required in order to carry out the purposes of this subsection.

“post-December reported amount” applies in that section

The term “post-December reported amount” means the aggregate reported amount determined by taking into account only dividends paid after December 31 of the taxable year. (D) Qualified net interest income For purposes of subparagraph (C),

“qualified interest income” applies in that section

the term “qualified interest income” means the sum of the following amounts derived by the regulated investment company from sources within the United States: (i) Any amount includible in gross income as original issue discount (within the meaning of section 1273) on an obligation payable 183 days or less from the date of original issue (without regard to the period held by the company).

“qualified net interest income” applies in that section

the term “qualified net interest income” means the qualified interest income of the regulated investment company reduced by the deductions properly allocable to such income. (E) Qualified interest income For purposes of subparagraph (D),

“qualified short-term gain” applies in that section

the term “qualified short-term gain” means the excess of the net short-term capital gain of the regulated investment company for the taxable year over the net long-term capital loss (if any) of such company for such taxable year. For purposes of this subparagraph, the net short-term capital gain of the regulated investment company shall be computed by treating any short-term capital gain dividend includible in gross income with respect to stock of another regulated investment company as a short-term capital gain.

“registered form” applies in that section

the term “registered form” has the same meaning given such term by section 163(f). (i) Tax not to apply to certain interest and dividends (1) In general No tax shall be imposed under paragraph (1)(A) or (1)(C) of subsection (a) on any amount described in paragraph (2). (2) Amounts to which paragraph (1) applies The amounts described in this paragraph are as follows: (A) Interest on deposits, if such interest is not effectively connected with the conduct of a trade or business within the United States. (B) The active foreign business percentage of— (i) any dividend paid by an existing 80/20 company, and (ii) any interest paid by an existing 80/20 company.

“related person” applies in that section

The term “related person” means any person who is related to the debtor within the meaning of section 267(b) or 707(b)(1), or who is a party to any arrangement undertaken for a purpose of avoiding the application of this paragraph.

“reported interest related dividend amount” applies in that section

The term “reported interest related dividend amount” means the amount reported to its shareholders under clause (i) as an interest related dividend. (II) Excess reported amount

“reported short-term capital gain dividend amount” applies in that section

The term “reported short-term capital gain dividend amount” means the amount reported to its shareholders under clause (i) as a short-term capital gain dividend. (II) Excess reported amount

“short party” applies in that section

The term “short party” means, with respect to any underlying security of any notional principal contract, any party to the contract which is not a long party with respect to such underlying security. (C) Underlying security

“short-term capital gain dividend” applies in that section

the term “short-term capital gain dividend” means any dividend, or part thereof, which is reported by the company as a short-term capital gain dividend in written statements furnished to its shareholders. (ii) Excess reported amounts If the aggregate reported amount with respect to the company for any taxable year exceeds the qualified short-term gain of the company for such taxable year,

“specified notional principal contract” applies in that section

the term “specified notional principal contract” means— (A) any notional principal contract if— (i) in connection with entering into such contract, any long party to the contract transfers the underlying security to any short party to the contract, (ii) in connection with the termination of such contract, any short party to the contract transfers the underlying security to any long party to the contract, (iii) the underlying security is not readily tradable on an established securities market, (iv) in connection with entering into such contract, the underlying security is posted as collateral by any short party to the contract with any long party to the contract, or (v) such contract is …

“subsidiary” applies in that section

the term “subsidiary” means any corporation in which the corporation referred to in subparagraph (A) owns (directly or indirectly) stock meeting the requirements of section 1504(a)(2) (determined by substituting “50 percent” for “80 percent” each place it appears and without regard to section 1504(b)(3)). (4) Regulations The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this section, including regulations or other guidance which provide for the proper application of the aggregation rules described in paragraph (3).

“testing period” applies in that section

the term “testing period” means the 3-year period ending with the close of the taxable year of the corporation preceding the payment (or such part of such period as may be applicable). If the corporation has no gross income for such 3-year period (or part thereof), the testing period shall be the taxable year in which the payment is made.

“underlying security” applies in that section

The term “underlying security” means, with respect to any notional principal contract, the security with respect to which the dividend referred to in paragraph (2)(B) is paid. For purposes of this paragraph, any index or fixed basket of securities shall be treated as a single security. (5) Payments determined on gross basis For purposes of this subsection,

“foreign employer” applies in that section

the term “foreign employer” means— (A) a nonresident alien individual, foreign partnership, or foreign corporation, or (B) an office or place of business maintained in a foreign country or in a possession of the United States by a domestic corporation, a domestic partnership, or an individual who is a citizen or resident of the United States. (4) Certain bond income of residents of the Ryukyu Islands or the Trust Territory of the Pacific Islands Income derived by a nonresident alien individual from a series E or series H United States savings bond, if such individual acquired such bond while a resident of the Ryukyu Islands or the Trust Territory of the Pacific Islands.

“long-term resident” applies in that section

the term “long-term resident” means any individual (other than a citizen of the United States) who is a lawful permanent resident of the United States in at least 8 taxable years during the period of 15 taxable years ending with the taxable year during which the event described in paragraph (1) occurs. For purposes of the preceding sentence, an individual shall not be treated as a lawful permanent resident for any taxable year if such individual is treated as a resident of a foreign country for the taxable year under the provisions of a tax treaty between the United States and the foreign country and does not waive the benefits of such treaty applicable to residents of the foreign country.

“covered expatriate” applies in that section

The term “covered expatriate” means an expatriate who meets the requirements of subparagraph (A), (B), or (C) of section 877(a)(2). (B) Exceptions An individual shall not be treated as meeting the requirements of subparagraph (A) or (B) of section 877(a)(2) if— (i) the individual— (I) became at birth a citizen of the United States and a citizen of another country and, as of the expatriation date, continues to be a citizen of, and is taxed as a resident of, such other country, and (II) has been a resident of the United States (as defined in section 7701(b)(1)(A)(ii)) for not more than 10 taxable years during the 15-taxable year period ending with the taxable year during which the …

“deferred compensation item” applies in that section

the term “deferred compensation item” means— (A) any interest in a plan or arrangement described in section 219(g)(5), (B) any interest in a foreign pension plan or similar retirement arrangement or program, (C) any item of deferred compensation, and (D) any property, or right to property, which the individual is entitled to receive in connection with the performance of services to the extent not previously taken into account under section 83 or in accordance with section 83.

“early distribution tax” applies in that section

The term “early distribution tax” means any increase in tax imposed under section 72(t), 220(f)(4), 223(f)(4), 409A(a)(1)(B), 529(c)(6), 529A(c)(3), or 530(d)(4). (h) Other rules (1) Termination of deferrals, etc.

“eligible deferred compensation item” applies in that section

the term “eligible deferred compensation item” means any deferred compensation item with respect to which— (A) the payor of such item is— (i) a United States person, or (ii) a person who is not a United States person but who elects to be treated as a United States person for purposes of paragraph (1) and meets such requirements as the Secretary may provide to ensure that the payor will meet the requirements of paragraph (1), and (B) the covered expatriate— (i) notifies the payor of his status as a covered expatriate, and (ii) makes an irrevocable waiver of any right to claim any reduction under any treaty with the United States in withholding on such item.

“expatriate” applies in that section

The term “expatriate” means— (A) any United States citizen who relinquishes his citizenship, and (B) any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)). (3) Expatriation date

“expatriation date” applies in that section

The term “expatriation date” means— (A) the date an individual relinquishes United States citizenship, or (B) in the case of a long-term resident of the United States, the date on which the individual ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6)). (4) Relinquishment of citizenship A citizen shall be treated as relinquishing his United States citizenship on the earliest of— (A) the date the individual renounces his United States nationality before a diplomatic or consular officer of the United States pursuant to paragraph (5) of section 349(a) of the Immigration and Nationality Act ( 8 U.S.C.

“long-term resident” applies in that section

The term “long-term resident” has the meaning given to such term by section 877(e)(2). (6) Early distribution tax

“nongrantor trust” applies in that section

the term “nongrantor trust” means the portion of any trust that the individual is not considered the owner of under subpart E of part I of subchapter J. The determination under the preceding sentence shall be made immediately before the expatriation date.

“specified tax deferred account” applies in that section

the term “specified tax deferred account” means an individual retirement plan (as defined in section 7701(a)(37)) other than any arrangement described in subsection (k) or (p) of section 408, a qualified tuition program (as defined in section 529), a qualified ABLE program (as defined in section 529A), a Coverdell education savings account (as defined in section 530), a health savings account (as defined in section 223), and an Archer MSA (as defined in section 220).

“taxable payment” applies in that section

the term “taxable payment” means with respect to a covered expatriate any payment to the extent it would be includible in the gross income of the covered expatriate if such expatriate continued to be subject to tax as a citizen or resident of the United States. A deferred compensation item shall be taken into account as a payment under the preceding sentence when such item would be so includible.

“taxable portion” applies in that section

the term “taxable portion” means, with respect to any distribution, that portion of the distribution which would be includible in the gross income of the covered expatriate if such expatriate continued to be subject to tax as a citizen or resident of the United States. (3) Nongrantor trust For purposes of this subsection,

“community income” applies in that section

The term “community income” means income which, under applicable community property laws, is treated as community income. (2) Community property laws

“community property laws” applies in that section

The term “community property laws” means the community property laws of a State, a foreign country, or a possession of the United States. (3) Determination of marital status The determination of marital status shall be made under section 7703(a).

“controlled foreign corporation” applies in that section

the term “controlled foreign corporation” has the meaning given to such term by section 957(a). (6) Secretary may cease application of this subsection Under rules similar to the rules of section 871(h)(6), the Secretary may provide that this subsection shall not apply to payments of interest described in section 871(h)(6). (7) Registered form For purposes of this subsection,

“foreign person” applies in that section

the term “foreign person” means any person other than— (i) a United States person, or (ii) a person who would be a United States person if references to the United States in section 7701 included references to a possession of the United States. (B) Indirect ownership rules For purposes of paragraph (1), the rules of section 318(a)(2) shall apply except that “5 percent” shall be substituted for “50 percent” in subparagraph (C) thereof.

“portfolio interest” applies in that section

the term “portfolio interest” means any interest (including original issue discount) which— (A) would be subject to tax under subsection (a) but for this subsection, and (B) is paid on an obligation— (i) which is in registered form, and (ii) with respect to which— (I) the person who would otherwise be required to deduct and withhold tax from such interest under section 1442(a) receives a statement which meets the requirements of section 871(h)(5) that the beneficial owner of the obligation is not a United States person, or (II) the Secretary has determined that such a statement is not required in order to carry out the purposes of this subsection.

“registered form” applies in that section

the term “registered form” has the meaning given such term by section 163(f). (d) Tax not to apply to certain interest and dividends No tax shall be imposed under paragraph (1) or (3) of subsection (a) on any amount described in section 871(i)(2). (e) Tax not to apply to certain dividends of regulated investment companies (1) Interest-related dividends (A) In general Except as provided in subparagraph (B), no tax shall be imposed under paragraph (1) of subsection (a) on any interest-related dividend (as defined in section 871(k)(1)) received from a regulated investment company.

“accumulated effectively connected earnings and profits” applies in that section

the term “accumulated effectively connected earnings and profits” means the excess of— (I) the aggregate effectively connected earnings and profits for preceding taxable years beginning after December 31, 1986 , over (II) the aggregate dividend equivalent amounts determined for such preceding taxable years. (c) U.S. net equity For purposes of this section— (1) In general

“allocable interest” applies in that section

the term “allocable interest” means any interest which is allocable to income which is effectively connected (or treated as effectively connected) with the conduct of a trade or business in the United States. (3) Coordination with treaties (A) Payor must be qualified resident In the case of any interest described in paragraph (1) which is paid or accrued by a foreign corporation, no benefit under any treaty between the United States and the foreign country of which such corporation is a resident shall apply unless— (i) such treaty is an income tax treaty, and (ii) such foreign corporation is a qualified resident of such foreign country.

“dividend equivalent amount” applies in that section

the term “dividend equivalent amount” means the foreign corporation’s effectively connected earnings and profits for the taxable year adjusted as provided in this subsection: (1) Reduction for increase in U.S. net equity If— (A) the U.S. net equity of the foreign corporation as of the close of the taxable year, exceeds (B) the U.S. net equity of the foreign corporation as of the close of the preceding taxable year, the effectively connected earnings and profits for the taxable year shall be reduced (but not below zero) by the amount of such excess. (2) Increase for decrease in net equity (A) In general If— (i) the U.S.

“effectively connected earnings and profits” applies in that section

The term “effectively connected earnings and profits” means earnings and profits (without diminution by reason of any distributions made during the taxable year) which are attributable to income which is effectively connected (or treated as effectively connected) with the conduct of a trade or business within the United States.

“qualified resident” applies in that section

the term “qualified resident” means, with respect to any foreign country, any foreign corporation which is a resident of such foreign country unless— (i) 50 percent or more (by value) of the stock of such foreign corporation is owned (within the meaning of section 883(c)(4)) by individuals who are not residents of such foreign country and who are not United States citizens or resident aliens, or (ii) 50 percent or more of its income is used (directly or indirectly) to meet liabilities to persons who are not residents of such foreign country or citizens or residents of the United States.

“U.S. assets” applies in that section

The term “U.S. assets” means the money and aggregate adjusted bases of property of the foreign corporation treated as connected with the conduct of a trade or business in the United States under regulations prescribed by the Secretary. For purposes of the preceding sentence, the adjusted basis of any property shall be its adjusted basis for purposes of computing earnings and profits. (B) U.S. liabilities

“U.S. liabilities” applies in that section

The term “U.S. liabilities” means the liabilities of the foreign corporation treated as connected with the conduct of a trade or business in the United States under regulations prescribed by the Secretary. (C) Regulations to be consistent with allocation of deductions The regulations prescribed under subparagraphs (A) and (B) shall be consistent with the allocation of deductions under section 882(c)(1). (d) Effectively connected earnings and profits For purposes of this section— (1) In general

“U.S. net equity” applies in that section

The term “U.S. net equity” means— (A) U.S. assets, reduced (including below zero) by (B) U.S. liabilities. (2) U.S. assets and U.S. liabilities For purposes of paragraph (1)— (A) U.S. assets

“United States source gross transportation income” applies in that section

the term “United States source gross transportation income” means any gross income which is transportation income (as defined in section 863(c)(3)) to the extent such income is treated as from sources in the United States under section 863(c)(2). To the extent provided in regulations, such term does not include any income of a kind to which an exemption under paragraph (1) or (2) of section 883(a) would not apply. (2) Exception for certain income effectively connected with business in the United States The term “United States source gross transportation income” shall not include any income taxable under section 871(b) or 882.

“controlled commercial entity” applies in that section

the term “controlled commercial entity” means any entity engaged in commercial activities (whether within or outside the United States) if the government— (i) holds (directly or indirectly) any interest in such entity which (by value or voting interest) is 50 percent or more of the total of such interests in such entity, or (ii) holds (directly or indirectly) any other interest in such entity which provides the foreign government with effective control of such entity. For purposes of the preceding sentence, a central bank of issue shall be treated as a controlled commercial entity only if engaged in commercial activities within the United States.

“applicable investor” applies in that section

the term “applicable investor” means, with respect to any qualified shareholder holding stock in a real estate investment trust, a person (other than a qualified shareholder) which— (i) holds an interest (other than an interest solely as a creditor) in such qualified shareholder, and (ii) holds more than 10 percent of the stock of such real estate investment trust (whether or not by reason of the person’s ownership interest in the qualified shareholder). (E) Constructive ownership rules For purposes of subparagraphs (B)(i) and (D), the constructive ownership rules under subsection (c)(6)(C) shall apply. (F) Applicable percentage For purposes of subparagraph (B),

“applicable percentage” applies in that section

the term “applicable percentage” means the percentage of the value of the interests (other than interests held solely as a creditor) in the qualified shareholder held by applicable investors. (3) Qualified shareholder For purposes of this subsection— (A) In general

“applicable wash sales transaction” applies in that section

The term “applicable wash sales transaction” means any transaction (or series of transactions) under which a nonresident alien individual, foreign corporation, or qualified investment entity— (I) disposes of an interest in a domestically controlled qualified investment entity during the 30-day period preceding the ex-dividend date of a distribution which is to be made with respect to the interest and any portion of which, but for the disposition, would have been treated by the taxpayer as gain from the sale or exchange of a United States real property interest under paragraph (1), and (II) acquires, or enters into a contract or option to acquire, a substantially identical interest in such …

“controlling interest” applies in that section

the term “controlling interest” means 50 percent or more of the fair market value of all classes of stock of a corporation. (6) Other special rules (A) Interest in real property

“domestically controlled qualified investment entity” applies in that section

The term “domestically controlled qualified investment entity” means any qualified investment entity in which at all times during the testing period less than 50 percent in value of the stock was held directly or indirectly by foreign persons. (C) Foreign ownership percentage

“foreign ownership percentage” applies in that section

The term “foreign ownership percentage” means that percentage of the stock of the qualified investment entity which was held (directly or indirectly) by foreign persons at the time during the testing period during which the direct and indirect ownership of stock by foreign persons was greatest. (D) Testing period

“interest in real property” applies in that section

The term “interest in real property” includes fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or improvements thereon, and options to acquire leaseholds of land or improvements thereon. (B) Real property includes associated personal property

“net United States real property gain” applies throughout this title

the term “net United States real property gain” means the excess of— (i) the aggregate of the gains for the taxable year from dispositions of United States real property interests, over (ii) the aggregate of the losses for the taxable year from dispositions of such interests. (b) Limitation on losses of individuals In the case of an individual, a loss shall be taken into account under subsection (a) only to the extent such loss would be taken into account under section 165(c) (determined without regard to subsection (a) of this section).

“nonrecognition provision” applies in that section

the term “nonrecognition provision” means any provision of this title for not recognizing gain or loss. [(f) Repealed. Pub. L. 104–188, title I, § 1702(g)(2) , Aug. 20, 1996 , 110 Stat. 1873 ] (g) Special rule for sales of interest in partnerships, trusts, and estates Under regulations prescribed by the Secretary, the amount of any money, and the fair market value of any property, received by a nonresident alien individual or foreign corporation in exchange for all or part of its interest in a partnership, trust, or estate shall, to the extent attributable to United States real property interests, be considered as an amount received from the sale or exchange in the United States of such …

“qualified collective investment vehicle” applies in that section

the term “qualified collective investment vehicle” means a foreign person— (i) which— (I) is eligible for benefits under the comprehensive income tax treaty described in subparagraph (A)(i)(I), but only if the dividends article of such treaty imposes conditions on the benefits allowable in the case of dividends paid by a real estate investment trust, and (II) is eligible under such treaty for a reduced rate of withholding with respect to ordinary dividends paid by a real estate investment trust even if such person holds more than 10 percent of the stock of such real estate investment trust, (ii) which— (I) is a publicly traded partnership (as defined in section 7704(b)) to which subsection …

“qualified foreign pension fund” applies in that section

the term “qualified foreign pension fund” means any trust, corporation, or other organization or arrangement— (A) which is created or organized under the law of a country other than the United States, (B) which is established— (i) by such country (or one or more political subdivisions thereof) to provide retirement or pension benefits to participants or beneficiaries that are current or former employees (including self-employed individuals) or persons designated by such employees, as a result of services rendered by such employees to their employers, or (ii) by one or more employers to provide retirement or pension benefits to participants or beneficiaries that are current or former …

“qualified investment entity” applies in that section

The term “qualified investment entity” means— (i) any real estate investment trust, and (ii) any regulated investment company which is a United States real property holding corporation or which would be a United States real property holding corporation if the exceptions provided in subsections (c)(3) and (h)(2) did not apply to interests in any real estate investment trust or regulated investment company. (B) Domestically controlled

“qualified shareholder” applies in that section

The term “qualified shareholder” means a foreign person which— (i) (I) is eligible for benefits of a comprehensive income tax treaty with the United States which includes an exchange of information program and the principal class of interests of which is listed and regularly traded on 1 or more recognized stock exchanges (as defined in such comprehensive income tax treaty), or (II) is a foreign partnership that is created or organized under foreign law as a limited partnership in a jurisdiction that has an agreement for the exchange of information with respect to taxes with the United States and has a class of limited partnership units which is regularly traded on the New York Stock …

“real property” applies in that section

The term “real property” includes movable walls, furnishings, and other personal property associated with the use of the real property. (C) Constructive ownership rules For purposes of determining under paragraph (3) whether any person holds more than 5 percent of any class of stock and of determining under paragraph (5) whether a person holds a controlling interest in any corporation, section 318(a) shall apply (except that paragraphs (2)(C) and (3)(C) of section 318(a) shall be applied by substituting “5 percent” for “50 percent”).

“testing period” applies in that section

The term “testing period” means whichever of the following periods is the shortest: (i) the period beginning on June 19, 1980 , and ending on the date of the disposition or of the distribution, as the case may be, (ii) the 5-year period ending on the date of the disposition or of the distribution, as the case may be, or (iii) the period during which the qualified investment entity was in existence.

“United States real property holding corporation” applies in that section

The term “United States real property holding corporation” means any corporation if— (A) the fair market value of its United States real property interests equals or exceeds 50 percent of (B) the fair market value of— (i) its United States real property interests, (ii) its interests in real property located outside the United States, plus (iii) any other of its assets which are used or held for use in a trade or business.

“United States real property interest” applies in that section

the term “United States real property interest” means— (i) an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the Virgin Islands, and (ii) any interest (other than an interest solely as a creditor) in any domestic corporation unless the taxpayer establishes (at such time and in such manner as the Secretary by regulations prescribes) that such corporation was at no time a United States real property holding corporation during the shorter of— (I) the period after June 18, 1980 , during which the taxpayer held such interest, or (II) the 5-year period ending on the date of the disposition of such interest.

“USRPI gain” applies in that section

the term “USRPI gain” means the excess (if any) of— (i) the sum of— (I) any gain recognized from the disposition of a United States real property interest, and (II) any distribution by a real estate investment trust that is treated as gain recognized from the sale or exchange of a United States real property interest, over (ii) any loss recognized from the disposition of a United States real property interest.

“majority U.S. shareholder year” applies in that section

the term “majority U.S. shareholder year” means the taxable year (if any) which, on each testing day, constituted the taxable year of— (i) each United States shareholder described in subsection (b)(2)(A), and (ii) each United States shareholder not described in clause (i) whose stock was treated as owned under subsection (b)(2)(B) by any shareholder described in such clause. (B) Testing day The testing days shall be— (i) the first day of the corporation’s taxable year (determined without regard to this section), or (ii) the days during such representative period as the Secretary may prescribe.

“specified foreign corporation” applies in that section

The term “specified foreign corporation” means any foreign corporation— (A) which is treated as a controlled foreign corporation for any purpose under subpart F of part III of this subchapter, and (B) with respect to which the ownership requirements of paragraph (2) are met. (2) Ownership requirements (A) In general The ownership requirements of this paragraph are met with respect to any foreign corporation if a United States shareholder owns, on each testing day, more than 50 percent of— (i) the total voting power of all classes of stock of such corporation entitled to vote, or (ii) the total value of all classes of stock of such corporation.

“United States shareholder” applies in that section

The term “United States shareholder” has the meaning given to such term by section 951(b), except that, in the case of a foreign corporation having related person insurance income (as defined in section 953(c)(2)), the Secretary may treat any person as a United States shareholder for purposes of this section if such person is treated as a United States shareholder under section 953(c)(1). (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 under regulations. (2) Majority U.S. shareholder year (A) In general For purposes of this subsection,

“basis difference” applies in that section

The term “basis difference” means, with respect to any relevant foreign asset, the excess of— (I) the adjusted basis of such asset immediately after the covered asset acquisition, over (II) the adjusted basis of such asset immediately before the covered asset acquisition. (ii) Built-in loss assets In the case of a relevant foreign asset with respect to which the amount described in clause (i)(II) exceeds the amount described in clause (i)(I), such excess shall be taken into account under this subsection as a basis difference of a negative amount.

“covered asset acquisition” applies in that section

the term “covered asset acquisition” means— (A) a qualified stock purchase (as defined in section 338(d)(3)) to which section 338(a) applies, (B) any transaction which— (i) is treated as an acquisition of assets for purposes of this chapter, and (ii) is treated as the acquisition of stock of a corporation (or is disregarded) for purposes of the foreign income taxes of the relevant jurisdiction, (C) any acquisition of an interest in a partnership which has an election in effect under section 754, and (D) to the extent provided by the Secretary, any other similar transaction. (3) Disqualified portion For purposes of this section— (A) In general

“dealer” applies in that section

the term “dealer” means— (i) with respect to a security, any person to whom paragraphs (1) and (2) of subsection (k) would not apply by reason of paragraph (4) thereof, and (ii) with respect to any other property, any person with respect to whom such property is described in section 1221(a)(1). (D) Regulations The Secretary may prescribe such regulations as may be appropriate to carry out this paragraph, including regulations to prevent the abuse of the exception provided by this paragraph and to treat other taxes as qualified taxes.

“disqualified portion” applies in that section

The term “disqualified portion” means, with respect to any covered asset acquisition, for any taxable year, the ratio (expressed as a percentage) of— (i) the aggregate basis differences (but not below zero) allocable to such taxable year under subparagraph (B) with respect to all relevant foreign assets, divided by (ii) the income on which the foreign income tax referred to in paragraph (1) is determined (or, if the taxpayer fails to substantiate such income to the satisfaction of the Secretary, such income shall be determined by dividing the amount of such foreign income tax by the highest marginal tax rate applicable to such income in the relevant jurisdiction).

“foreign income tax” applies in that section

the term “foreign income tax” means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States. (6) Taxes allowed as a deduction, etc. Sections 275 and 78 shall not apply to any tax which is not allowable as a credit under subsection (a) by reason of this subsection. (7) Regulations The Secretary may issue such regulations or other guidance as is necessary or appropriate to carry out the purposes of this subsection, including to exempt from the application of this subsection certain covered asset acquisitions, and relevant foreign assets with respect to which the basis difference is de minimis.

“foreign mineral income” applies throughout its subpart

the term “foreign mineral income” means income derived from the extraction of minerals from mines, wells, or other natural deposits, the processing of such minerals into their primary products, and the transportation, distribution, or sale of such minerals or primary products. Such term includes, but is not limited to 1 that portion of the taxpayer’s distributive share of the income of partnerships attributable to foreign mineral income.

“qualified tax” applies in that section

the term “qualified tax” means a tax paid to a foreign country (other than the foreign country referred to in subparagraph (A)) if— (i) the dividend to which such tax is attributable is subject to taxation on a net basis by the country referred to in subparagraph (A), and (ii) such country allows a credit against its net basis tax for the full amount of the tax paid to such other foreign country. (C) Regulations The Secretary may prescribe such regulations as may be appropriate to carry out this paragraph, including regulations to prevent the abuse of the exception provided by this paragraph and to treat other taxes as qualified taxes.

“relevant foreign asset” applies in that section

the term “relevant foreign asset” means, with respect to any covered asset acquisition, any asset (including any goodwill, going concern value, or other intangible) with respect to such acquisition if income, deduction, gain, or loss attributable to such asset is taken into account in determining the foreign income tax referred to in paragraph (1). (5) Foreign income tax For purposes of this section,

“withholding tax” applies in that section

the term “withholding tax” includes any tax determined on a gross basis; but does not include any tax which is in the nature of a prepayment of a tax imposed on a net basis. (2) Deemed paid taxes In the case of income, war profits, or excess profits taxes deemed paid under section 853 or 960 through a chain of ownership of stock in 1 or more corporations, no credit shall be allowed under subsection (a) for such taxes if— (A) any stock of any corporation in such chain (the ownership of which is required to obtain credit under subsection (a) for such taxes) is held for less than the period described in paragraph (1)(A)(i), or (B) the corporation holding the stock is under an obligation …

“income, war profits, and excess profits taxes” applies throughout its part

the term “income, war profits, and excess profits taxes” shall include a tax paid in lieu of a tax on income, war profits, or excess profits otherwise generally imposed by any foreign country or by any possession of the United States.

“applicable disposition” applies in that section

the term “applicable disposition” means any disposition of any share of stock in a controlled foreign corporation in a transaction or series of transactions if, immediately before such transaction or series of transactions, the taxpayer owned more than 50 percent (by vote or value) of the stock of the controlled foreign corporation. Such term shall not include a disposition described in clause (iii) or (iv), except that clause (i) shall apply to any gain recognized on any such disposition.

“applicable taxable year” applies in that section

the term “applicable taxable year” means any taxable year of the taxpayer beginning after December 31, 2017 , and before January 1, 2028 . (h) Source rules in case of United States-owned foreign corporations (1) In general The following amounts which are derived from a United States-owned foreign corporation and which would be treated as derived from sources outside the United States without regard to this subsection shall, for purposes of this section, be treated as derived from sources within the United States to the extent provided in this subsection: (A) Any amount included in gross income under— (i) section 951(a) (relating to amounts included in gross income of United States …

“controlled foreign corporation” applies in that section

The term “controlled foreign corporation” has the meaning given such term by section 957 (taking into account section 953(c)). (B) United States shareholder

“creditable foreign taxes” applies in that section

The term “creditable foreign taxes” means any taxes for which a credit is allowable under section 901; except that such term shall not include any tax unless such tax is shown on a payee statement furnished to such individual. (C) Payee statement

“disposition” applies in that section

the term “disposition” includes a sale, exchange, distribution, or gift of property whether or not gain or loss is recognized on the transfer. (ii) Any taxable income recognized solely by reason of subparagraph (A) shall have the same characterization it would have had if the taxpayer had sold or exchanged the property. (iii) The Secretary shall prescribe such regulations as he may deem necessary to provide for adjustments to the basis of property to reflect taxable income recognized solely by reason of subparagraph (A).

“dividend” applies in that section

the term “dividend” includes any amount included in gross income in section 951(a)(1)(B). Any amount included in gross income under section 78 to the extent attributable to amounts included in gross income in section 951(a)(1)(A) shall not be treated as a dividend but shall be treated as included in gross income under section 951(a)(1)(A).

“domestic loss” applies in that section

the term “domestic loss” means the amount by which the gross income for the taxable year from sources within the United States is exceeded by the sum of the deductions properly apportioned or allocated thereto (determined without regard to any carryback from a subsequent taxable year). (C) Qualified taxable year For purposes of subparagraph (A),

“export financing interest” applies in that section

the term “export financing interest” means any interest derived from financing the sale (or other disposition) for use or consumption outside the United States of any property— (i) which is manufactured, produced, grown, or extracted in the United States by the taxpayer or a related person, and (ii) not more than 50 percent of the fair market value of which is attributable to products imported into the United States. For purposes of clause (ii), the fair market value of any property imported into the United States shall be its appraised value, as determined by the Secretary under section 402 of the Tariff Act of 1930 ( 19 U.S.C. 1401a ) in connection with its importation.

“financial services group” applies in that section

The term “financial services group” means any affiliated group (as defined in section 1504(a) without regard to paragraphs (2) and (3) of section 1504(b)) which is predominantly engaged in the active conduct of a banking, insurance, financing, or similar business. In determining whether such a group is so engaged, there shall be taken into account only the income of members of the group that are— (I) United States corporations, or (II) controlled foreign corporations in which such United States corporations own, directly or indirectly, at least 80 percent of the total voting power and value of the stock.

“financial services income” applies in that section

the term “financial services income” means any income which is received or accrued by any person predominantly engaged in the active conduct of a banking, insurance, financing, or similar business, and which is— (I) described in clause (ii), or (II) passive income (determined without regard to subparagraph (B)(iii)(II)).

“foreign branch income” applies in that section

The term “foreign branch income” means the business profits of such United States person which are attributable to 1 or more qualified business units (as defined in section 989(a)) in 1 or more foreign countries. For purposes of the preceding sentence, the amount of business profits attributable to a qualified business unit shall be determined under rules established by the Secretary. (ii) Exception Such term shall not include any income which is passive category income.

“foreign income taxes” applies in that section

the term “foreign income taxes” means any income, war profits, or excess profits tax imposed by any foreign country or possession of the United States. (G) Export financing interest For purposes of this paragraph,

“foreign source capital gain net income” applies in that section

The term “foreign source capital gain net income” means the lesser of— (i) capital gain net income from sources without the United States, or (ii) capital gain net income. (B) Foreign source net capital gain

“foreign source net capital gain” applies in that section

The term “foreign source net capital gain” means the lesser of— (i) net capital gain from sources without the United States, or (ii) net capital gain. (C) Section 1231 gains

“gain from the sale or exchange of capital assets” applies in that section

The term “gain from the sale or exchange of capital assets” includes any gain so treated under section 1231. (D) Capital gain rate differential There is a capital gain rate differential for any year if subsection (h) of section 1 applies to such taxable year.

“general category income” applies in that section

The term “general category income” means income other than income described in paragraph (1)(A), foreign branch income, and passive category income. (B) Passive income (i) In general Except as otherwise provided in this subparagraph,

“high-taxed income” applies in that section

The term “high-taxed income” means any income which (but for this subparagraph) would be passive income if the sum of— (i) the foreign income taxes paid or accrued by the taxpayer with respect to such income, and (ii) the foreign income taxes deemed paid by the taxpayer with respect to such income under section 902 1 or 960, exceeds the highest rate of tax specified in section 1 or 11 (whichever applies) multiplied by the amount of such income (determined with regard to section 78). For purposes of the preceding sentence,

“income category” applies in that section

The term “income category” means each separate category of income described in subsection (d)(1). (ii) Separate limitation income

“noncontrolled 10-percent owned foreign corporation” applies in that section

The term “noncontrolled 10-percent owned foreign corporation” means any foreign corporation which is— (I) a specified 10-percent owned foreign corporation (as defined in section 245A(b)), or (II) a passive foreign investment company (as defined in section 1297(a)) with respect to which the taxpayer meets the stock ownership requirements of section 902(a) (or, for purposes of applying paragraphs (3) and (4), the requirements of section 902(b)). A controlled foreign corporation shall not be treated as a noncontrolled 10-percent owned foreign corporation with respect to any distribution out of its earnings and profits for periods during which it was a controlled foreign corporation.

“overall domestic loss” applies in that section

The term “overall domestic loss” means— (i) with respect to any qualified taxable year, the domestic loss for such taxable year to the extent such loss offsets taxable income from sources without the United States for the taxable year or for any preceding qualified taxable year by reason of a carryback, and (ii) with respect to any other taxable year, the domestic loss for such taxable year to the extent such loss offsets taxable income from sources without the United States for any preceding qualified taxable year by reason of a carryback. (B) Domestic loss For purposes of subparagraph (A),

“overall foreign loss” applies in that section

the term “overall foreign loss” means the amount by which the gross income for the taxable year from sources without the United States (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) for such year is exceeded by the sum of the deductions properly apportioned or allocated thereto, except that there shall not be taken into account— (A) any net operating loss deduction allowable for such year under section 172(a), and (B) any— (i) foreign expropriation loss for such year, as defined in section 172(h) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990), or (ii) loss for such year which arises from fire, …

“passive category income” applies in that section

The term “passive category income” means passive income and specified passive category income. (ii) General category income

“passive income” applies in that section

the term “passive income” means any income received or accrued by any person which is of a kind which would be foreign personal holding company income (as defined in section 954(c)). (ii) Certain amounts included Except as provided in clause (iii), subparagraph (E)(ii), or paragraph (3)(H),

“payee statement” applies in that section

The term “payee statement” has the meaning given to such term by section 6724(d)(2). (D) Estates and trusts not eligible This subsection shall not apply to any estate or trust. (k) Cross references For increase of limitation under subsection (a) for taxes paid with respect to amounts received which were included in the gross income of the taxpayer for a prior taxable year as a United States shareholder with respect to a controlled foreign corporation, see section 960(c).

“pre-2018 unused overall domestic loss” applies in that section

the term “pre-2018 unused overall domestic loss” means any overall domestic loss which— (i) arises in a qualified taxable year beginning before January 1, 2018 , and (ii) has not been used under paragraph (1) for any taxable year beginning before such date. (C) Applicable taxable year For purposes of this paragraph,

“qualified passive income” applies in that section

The term “qualified passive income” means any item of gross income if— (i) such item of income is passive income (as defined in subsection (d)(2)(B) without regard to clause (iii) thereof), and (ii) such item of income is shown on a payee statement furnished to the individual. (B) Creditable foreign taxes

“qualified taxable year” applies in that section

the term “qualified taxable year” means any taxable year for which the taxpayer chose the benefits of this subpart. (3) Characterization of subsequent income (A) In general Any income from sources within the United States that is treated as income from sources without the United States under paragraph (1) shall be allocated among and increase the income categories in proportion to the loss from sources within the United States previously allocated to those income categories. (B) Income category For purposes of this paragraph,

“related person” applies in that section

the term “related person” has the meaning given such term by section 954(d)(3), except that such section shall be applied by substituting “the person with respect to whom the determination is being made” for “controlled foreign corporation” each place it appears. (J) Foreign branch income (i) In general

“separate limitation income” applies in that section

The term “separate limitation income” means, with respect to any income category, the taxable income from sources outside the United States, separately computed for such category. (iii) Separate limitation loss

“separate limitation loss” applies in that section

The term “separate limitation loss” means, with respect to any income category, the loss from such category determined under the principles of section 907(c)(4)(B). (F) Dispositions If any separate limitation loss for any taxable year is allocated against any separate limitation income for such taxable year, except to the extent provided in regulations, rules similar to the rules of paragraph (3) shall apply to any disposition of property if gain from such disposition would be in the income category with respect to which there was such separate limitation loss.

“specified passive category income” applies in that section

The term “specified passive category income” means— (I) dividends from a DISC or former DISC (as defined in section 992(a)) to the extent such dividends are treated as income from sources without the United States, and (II) distributions from a former FSC (as defined in section 922) out of earnings and profits attributable to foreign trade income (within the meaning of section 923(b)) or interest or carrying charges (as defined in section 927(d)(1)) derived from a transaction which results in foreign trade income (as defined in section 923(b)).

“United States shareholder” applies in that section

The term “United States shareholder” has the meaning given such term by section 951(b) (taking into account section 953(c)). (6) Separate application to items resourced under treaties (A) In general If— (i) without regard to any treaty obligation of the United States, any item of income would be treated as derived from sources within the United States, (ii) under a treaty obligation of the United States, such item would be treated as arising from sources outside the United States, and (iii) the taxpayer chooses the benefits of such treaty obligation, subsections (a), (b), and (c) of this section and sections 907 and 960 shall be applied separately with respect to each such item.

“United States source ratio” applies in that section

the term “United States source ratio” means, with respect to any dividend paid out of the earnings and profits for any taxable year, a fraction— (i) the numerator of which is the portion of the earnings and profits for such taxable year from sources within the United States, and (ii) the denominator of which is the total amount of earnings and profits for such taxable year.

“United States-owned foreign corporation” applies in that section

the term “United States-owned foreign corporation” means any foreign corporation if 50 percent or more of— (A) the total combined voting power of all classes of stock of such corporation entitled to vote, or (B) the total value of the stock of such corporation, is held directly (or indirectly through applying paragraphs (2) and (3) of section 958(a) and paragraph (4) of section 318(a)) by United States persons (as defined in section 7701(a)(30)). (7) Dividend For purposes of this subsection,

“combined foreign oil and gas income” applies in that section

The term “combined foreign oil and gas income” means, with respect to any taxable year, the sum of— (A) foreign oil and gas extraction income, and (B) foreign oil related income. (2) Foreign oil and gas taxes

“foreign oil and gas extraction income” applies in that section

The term “foreign oil and gas extraction income” means the taxable income derived from sources without the United States and its possessions from— (A) the extraction (by the taxpayer or any other person) of minerals from oil or gas wells, or (B) the sale or exchange of assets used by the taxpayer in the trade or business described in subparagraph (A). Such term does not include any dividend or interest income which is passive income (as defined in section 904(d)(2)(A)). (2) Foreign oil related income

“foreign oil and gas loss” applies in that section

the term “foreign oil and gas loss” means the amount by which— (I) the gross income for the taxable year from sources without the United States and its possessions (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) taken into account in determining the combined foreign oil and gas income for such year, is exceeded by (II) the sum of the deductions properly apportioned or allocated thereto. (ii) Net operating loss deduction not taken into account For purposes of clause (i), the net operating loss deduction allowable for the taxable year under section 172(a) shall not be taken into account.

“foreign oil and gas taxes” applies in that section

The term “foreign oil and gas taxes” means, with respect to any taxable year, the sum of— (A) oil and gas extraction taxes, and (B) any income, war profits, and excess profits taxes paid or accrued (or deemed to have been paid or accrued under section 960) during the taxable year with respect to foreign oil related income (determined without regard to subsection (c)(4)) or loss which would be taken into account for purposes of section 901 without regard to this section. (c) Foreign income definitions and special rules For purposes of this section— (1) Foreign oil and gas extraction income

“foreign oil related income” applies in that section

The term “foreign oil related income” means the taxable income derived from sources outside the United States and its possessions from— (A) the processing of minerals extracted (by the taxpayer or by any other person) from oil or gas wells into their primary products, (B) the transportation of such minerals or primary products, (C) the distribution or sale of such minerals or primary products, (D) the disposition of assets used by the taxpayer in the trade or business described in subparagraph (A), (B), or (C), or (E) the performance of any other related service. Such term does not include any dividend or interest income which is passive income (as defined in section 904(d)(2)(A)).

“oil and gas extraction taxes” applies in that section

The term “oil and gas extraction taxes” means any income, war profits, and excess profits tax paid or accrued (or deemed to have been paid under section 960) during the taxable year with respect to foreign oil and gas extraction income (determined without regard to paragraph (4)) or loss which would be taken into account for purposes of section 901 without regard to this section. (d) Disregard of certain posted prices, etc.

“covered person” applies in that section

The term “covered person” means, with respect to any person who pays or accrues a foreign income tax (hereafter in this paragraph referred to as the “payor”)— (A) any entity in which the payor holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value), (B) any person which holds, directly or indirectly, at least a 10 percent ownership interest (determined by vote or value) in the payor, (C) any person which bears a relationship to the payor described in section 267(b) or 707(b), and (D) any other person specified by the Secretary for purposes of this paragraph.

“foreign income tax” applies in that section

The term “foreign income tax” means any income, war profits, or excess profits tax paid or accrued to any foreign country or to any possession of the United States. (3) Related income

“related income” applies in that section

The term “related income” means, with respect to any portion of any foreign income tax, the income (or, as appropriate, earnings and profits) to which such portion of foreign income tax relates. (4) Covered person

“earned income” applies in that section

The term “earned income” means wages, salaries, or professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.

“employer provided amounts” applies in that section

the term “employer provided amounts” means any amount paid or incurred on behalf of the individual by the individual’s employer which is foreign earned income included in the individual’s gross income for the taxable year (without regard to this section). (E) Foreign earned income For purposes of this paragraph, an individual’s foreign earned income for any taxable year shall be determined without regard to the limitation of subparagraph (A) of subsection (b)(2). (d) Definitions and special rules For purposes of this section— (1) Qualified individual

“housing cost amount” applies in that section

The term “housing cost amount” means an amount equal to the excess of— (A) the housing expenses of an individual for the taxable year to the extent such expenses do not exceed the amount determined under paragraph (2), over (B) an amount equal to the product of— (i) 16 percent of the amount (computed on a daily basis) in effect under subsection (b)(2)(D) for the calendar year in which such taxable year begins, multiplied by (ii) the number of days of such taxable year within the applicable period described in subparagraph (A) or (B) of subsection (d)(1).

“housing expenses” applies in that section

The term “housing expenses” means the reasonable expenses paid or incurred during the taxable year by or on behalf of an individual for housing for the individual (and, if they reside with him, for his spouse and dependents) in a foreign country. The term— (i) includes expenses attributable to the housing (such as utilities and insurance), but (ii) does not include interest and taxes of the kind deductible under section 163 or 164 or any amount allowable as a deduction under section 216(a). Housing expenses shall not be treated as reasonable to the extent such expenses are lavish or extravagant under the circumstances.

“qualified individual” applies in that section

The term “qualified individual” means an individual whose tax home is in a foreign country and who is— (A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or (B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period. (2) Earned income (A) In general

“tax home” applies in that section

The term “tax home” means, with respect to any individual, such individual’s home for purposes of section 162(a)(2) (relating to traveling expenses while away from home). An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States, unless such individual is serving in an area designated by the President of the United States by Executive order as a combat zone for purposes of section 112 in support of the Armed Forces of the United States.

“specified possession” applies in that section

the term “specified possession” means Guam, American Samoa, and the Northern Mariana Islands. (d) Employees of the United States Amounts paid for services performed as an employee of the United States (or any agency thereof) shall be treated as not described in paragraph (1) or (2) of subsection (a).

“applicable percentage” applies in that section

the term “applicable percentage” means the percentage which Virgin Islands adjusted gross income bears to adjusted gross income. (B) Virgin Islands adjusted gross income For purposes of subparagraph (A),

“Virgin Islands adjusted gross income” applies in that section

the term “Virgin Islands adjusted gross income” means adjusted gross income determined by taking into account only income derived from sources within the Virgin Islands and deductions properly apportioned or allocable thereto. (3) Amounts paid allowed as credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the taxes required to be paid to the Virgin Islands under paragraph (1) which are so paid.

“qualified foreign corporation” applies in that section

the term “qualified foreign corporation” means any foreign corporation if less than 10 percent of— (i) the total voting power of the stock of such corporation, and (ii) the total value of the stock of such corporation, is owned or treated as owned (within the meaning of section 958) by 1 or more United States persons. (4) Determination of income source, etc. The determination as to whether income is derived from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall be made under regulations prescribed by the Secretary.

“bona fide resident” applies throughout its subpart

the term “bona fide resident” means a person— (1) who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and (2) who does not have a tax home (determined under the principles of section 911(d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.