U.S. Tax Law: Internal Revenue Code
U.S. GAAP Codification IFRS U.S. Tax Code

U.S. Tax Law
Internal Revenue Code

U.S. GAAP Codification U.S. Tax Code by Section
Financial Accounting Intermediate Accounting Advanced Accounting
IFRS-U.S. GAAP ComparisonSecurities Law Library




USC Title 26 enacted through 2008

§ 956. Investment of earnings in United States property

 
(a)
General rule
 
In the case of any controlled foreign corporation, the amount determined under this section with respect to any United States shareholder for any taxable year is the lesser of -
 
(1)
the excess (if any) of -
 
(A)
such shareholder's pro rata share of the average of the amounts of United States property held (directly or indirectly) by the controlled foreign corporation as of the close of each quarter of such taxable year, over
 
(B)
the amount of earnings and profits described in section 959(c)(1)(A) with respect to such shareholder, or
 
(2)
such shareholder's pro rata share of the applicable earnings of such controlled foreign corporation.
 
The amount taken into account under paragraph (1) with respect to any property shall be its adjusted basis as determined for purposes of computing earnings and profits, reduced by any liability to which the property is subject.
 
(b)
Special rules
 
(1)
Applicable earnings
 
For purposes of this section, the term "applicable earnings" means, with respect to any controlled foreign corporation, the sum of -
 
(A)
the amount (not including a deficit) referred to in section 316(a)(1) to the extent such amount was accumulated in prior taxable years, and
 
(B)
the amount referred to in section 316(a)(2),
 
but reduced by distributions made during the taxable year and by earnings and profits described in section 959(c)(1).
 
(2)
Special rule for U.S. property acquired before corporation is a controlled foreign corporation
 
In applying subsection (a) to any taxable year, there shall be disregarded any item of United States property which was acquired by the controlled foreign corporation before the first day on which such corporation was treated as a controlled foreign corporation. The aggregate amount of property disregarded under the preceding sentence shall not exceed the portion of the applicable earnings of such controlled foreign corporation which were accumulated during periods before such first day.
 
(3)
Special rule where corporation ceases to be controlled foreign corporation
 
If any foreign corporation ceases to be a controlled foreign corporation during any taxable year -
 
(A)
the determination of any United States shareholder's pro rata share shall be made on the basis of stock owned (within the meaning of section 958(a)) by such shareholder on the last day during the taxable year on which the foreign corporation is a controlled foreign corporation,
 
(B)
the average referred to in subsection (a)(1)(A) for such taxable year shall be determined by only taking into account quarters ending on or before such last day, and
 
(C)
in determining applicable earnings, the amount taken into account by reason of being described in paragraph (2) of section 316(a) shall be the portion of the amount so described which is allocable (on a pro rata basis) to the part of such year during which the corporation is a controlled foreign corporation.
 
(c)
United States property defined
 
(1)
In general
 
For purposes of subsection (a), the term "United States property" means any property acquired after December 31, 1962, which is -
 
(A)
tangible property located in the United States;
 
(B)
stock of a domestic corporation;
 
(C)
an obligation of a United States person; or
 
(D)
any right to the use in the United States of -
 
(i)
a patent or copyright,
 
(ii)
an invention, model, or design (whether or not patented),
 
(iii)
a secret formula or process, or
 
(iv)
any other similar right,
 
which is acquired or developed by the controlled foreign corporation for use in the United States.
 
(2)
Exceptions
 
For purposes of subsection (a), the term "United States property" does not include -
 
(A)
obligations of the United States, money, or deposits with -
 
(i)
any bank (as defined by section 2(c) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(c)), without regard to subparagraphs (C) and (G) of paragraph (2) of such section), or
 
(ii)
any corporation not described in clause (i) with respect to which a bank holding company (as defined by section 2(a) of such Act) or financial holding company (as defined by section 2(p) of such Act) owns directly or indirectly more than 80 percent by vote or value of the stock of such corporation;
 
(B)
property located in the United States which is purchased in the United States for export to, or use in, foreign countries;
 
(C)
any obligation of a United States person arising in connection with the sale or processing of property if the amount of such obligation outstanding at no time during the taxable year exceeds the amount which would be ordinary and necessary to carry on the trade or business of both the other party to the sale or processing transaction and the United States person had the sale or processing transaction been made between unrelated persons;
 
(D)
any aircraft, railroad rolling stock, vessel, motor vehicle, or container used in the transportation of persons or property in foreign commerce and used predominantly outside the United States;
 
(E)
an amount of assets of an insurance company equivalent to the unearned premiums or reserves ordinary and necessary for the proper conduct of its insurance business attributable to contracts which are not contracts described in section 953(a)(1);[FN 1]
 
See References in Text note below.
 
(F)
the stock or obligations of a domestic corporation which is neither a United States shareholder (as defined in section 951(b)) of the controlled foreign corporation, nor a domestic corporation, 25 percent or more of the total combined voting power of which, immediately after the acquisition of any stock in such domestic corporation by the controlled foreign corporation, is owned, or is considered as being owned, by such United States shareholders in the aggregate;
 
(G)
any movable property (other than a vessel or aircraft) which is used for the purpose of exploring for, developing, removing, or transporting resources from ocean waters or under such waters when used on the Continental Shelf of the United States;
 
(H)
an amount of assets of the controlled foreign corporation equal to the earnings and profits accumulated after December 31, 1962, and excluded from subpart F income under section 952(b);
 
(I)
deposits of cash or securities made or received on commercial terms in the ordinary course of a United States or foreign person's business as a dealer in securities or in commodities, but only to the extent such deposits are made or received as collateral or margin for (i) a securities loan, notional principal contract, options contract, forward contract, or futures contract, or (ii) any other financial transaction in which the Secretary determines that it is customary to post collateral or margin;
 
(J)
an obligation of a United States person to the extent the principal amount of the obligation does not exceed the fair market value of readily marketable securities sold or purchased pursuant to a sale and repurchase agreement or otherwise posted or received as collateral for the obligation in the ordinary course of its business by a United States or foreign person which is a dealer in securities or commodities;
 
(K)
securities acquired and held by a controlled foreign corporation in the ordinary course of its business as a dealer in securities if -
 
(i)
the dealer accounts for the securities as securities held primarily for sale to customers in the ordinary course of business, and
 
(ii)
the dealer disposes of the securities (or such securities mature while held by the dealer) within a period consistent with the holding of securities for sale to customers in the ordinary course of business; and
 
(L)
an obligation of a United States person which -
 
(i)
is not a domestic corporation, and
 
(ii)
is not -
 
(I)
a United States shareholder (as defined in section 951(b)) of the controlled foreign corporation, or
 
(II)
a partnership, estate, or trust in which the controlled foreign corporation, or any related person (as defined in section 954(d)(3)), is a partner, beneficiary, or trustee immediately after the acquisition of any obligation of such partnership, estate, or trust by the controlled foreign corporation.
 
For purposes of subparagraphs (I), (J), and (K), the term "dealer in securities" has the meaning given such term by section 475(c)(1), and the term "dealer in commodities" has the meaning given such term by section 475(e), except that such term shall include a futures commission merchant.
 
(3)
Certain trade or service receivables acquired from related United States persons
 
(A)
In general
 
Notwithstanding paragraph (2) (other than subparagraph (H) thereof), the term "United States property" includes any trade or service receivable if -
 
(i)
such trade or service receivable is acquired (directly or indirectly) from a related person who is a United States person, and
 
(ii)
the obligor under such receivable is a United States person.
 
(B)
Definitions
 
For purposes of this paragraph, the term "trade or service receivable" and "related person" have the respective meanings given to such terms by section 864(d).
 
(d)
Pledges and guarantees
 
For purposes of subsection (a), a controlled foreign corporation shall, under regulations prescribed by the Secretary, be considered as holding an obligation of a United States person if such controlled foreign corporation is a pledgor or guarantor of such obligations.
 
(e)
Regulations
 
The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section, including regulations to prevent the avoidance of the provisons[FN 2] of this section through reorganizations or otherwise.
 
So in original. Probably should be "provisions".








Tax Code (Internal Revenue Code) Section Index


U.S. GAAP by Codification Topic
 
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold


U.S. GAAP Codification
Accounting Topics
Tax Code (Internal Revenue Code) Section Index




Disclaimer: Information on this page is provided for general understanding of tax concepts and rules only, not for the application in real tax situations. Seek advice from qualified professionals to address tax related questions.


Copyright © 2010 by CPAClass.com.TM  All Rights Reserved.
No copyright claimed on original U.S. Government works.