§551 — [§§551 to 558. Repealed. Pub. L. 108–357, title IV, §413(a)(1), Oct. 22, 2004, 118 Stat. 1506 ] Section 551, acts Aug. 16, 1954, ch. 736, 68A Stat. 193 ; Pub. L. 88–272, title II, §225(f)(4), Feb. 26, 1964, 78 Stat. 88 ; Pub. L. 94–455, title XIX, §1901(a)(79), (b)(1)(F)(i), (12)(A), Oct. 4, 1976, 90 Stat. 1777 , 1790, 1795; Pub. L. 98–369, div. A, title I, §132(b), July 18, 1984, 98 Stat. 666 ; Pub. L. 99–514, title XII, §1235(e), title XVIII, §1810(h)(2), Oct. 22, 1986, 100 Stat. 2575 , 2829; Pub. L. 100–647, title I, §1012(bb)(1)(A), (B), Nov. 10, 1988, 102 Stat. 3533 ; Pub. L. 105–34, title XI, §1122(d)(2), Aug. 5, 1997, 111 Stat. 977 , provided for taxation of foreign personal holding company income to United States shareholders.
53 citing cases
Statute Text — 26 U.S.C. §551
Statute text not available for this section.
Treasury Regulations
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Treas. Reg. §1.551-1General rule
Part III (section 551 and following), subchapter G, chapter 1 of the Code, does not impose a tax on foreign personal holding companies. The undistributed foreign personal holding company income of such companies, however, must be included in the manner and to the extent set forth in section 551, in the gross income of their United States shareholders, that is, the shareholders who are individual citizens or residents of the United States, domestic corporations, domestic partnerships, and estates or trusts other than estates or trusts the gross income of which under subtitle A of the Code includes only income from sources within the United States.
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Treas. Reg. §1.551-2Amount included in gross income
(a) The undistributed foreign personal holding company income is included only in the gross income of the United States shareholders who were shareholders in the company on the last day of its taxable year on which a United States group (as defined in section 552(a)(2)) existed with respect to the company. Such United States shareholders, accordingly, are determined by the stock holdings as of such specified time. This rule applies to every United States shareholder who was a shareholder in the company at the specified time regardless of whether the United States shareholder is included within the United States group. For example, a domestic corporation which is a United States shareholder at the specified time must return its distributive share in the undistributed foreign personal holding company income even though the domestic corporation cannot be included within the United States group since, under section 554, the stock it owns in the foreign corporation is considered as being owned proportionately by its shareholders for the purpose of determining whether the foreign corporation is a foreign personal holding company.
(b) The United States shareholders must include in their gross income their distributive shares of that proportion of the undistributed foreign personal holding company income for the taxable year of the company which is equal in ratio to that which the portion of the taxable year up to and including the last day on which the United States group with respect to the company existed bears to the entire taxable year. Thus, if the last day in the taxable year on which the required United States group existed was also the end of the taxable year, the portion of the taxable year up to and incding such last day would be equal to 100 percent and, in such case, the United States shareholders would be required to return their distributive shares in the entire undistributed foreign personal holding company income. But if the last day on which the required United States group existed was September 30, and the taxable year was a calendar year, the portion of the taxable year up to and including such last day would be equal to nine-twelfths and, in that case, the United States shareholders would be required to return their distributive shares in only nine-twelfths of the undistributed foreign personal holding company income.
(c) The amount which each United States shareholder must return is that amount which he would have received as a dividend if the above-specified portion of the undistributed foreign personal holding company income had in fact been distributed by the foreign personal holding company as a dividend on the last day of its taxable year on which the required United States group existed. Such amount is determined, therefore, by the interest of the United States shareholder in the foreign personal holding company, that is, by the number of shares of stock owned by the United States shareholder and the relative rights of his class of stock, if there are several classes of stock outstanding. Thus, if a foreign personal holding company has both common and preferred stock outstanding and the preferred shareholders are entitled to a specified dividend before any distribution may be made to the common shareholders, then the assumed distribution of the stated portion of the undistributed foreign personal holding company income must first be treated as a payment of the specified dividend on the preferred stock before any part may be allocated as a dividend on the common stock.
(d) The assumed distribution of the required portion of the undistributed foreign personal holding company income must be returned as dividend income by the United States shareholders for their respective taxable years in which or with which the taxable year of the foreign personal holding company ends. For example, if the M Corporation, whose taxable year is the calendar year, is a foreign personal holding company for 1954 and if A, one of its United States shareholders, makes returns on a calendar year basis, while B, another United States shareholder, makes returns on the basis of a fiscal year ending November 30, A must return his assumed dividend as income for the taxable year 1954 and B must return his distributive share as income for the fiscal year ending November 30, 1955. In applying this rule, the date as of which the United States group last existed with respect to the company is immaterial. Thus, in the foregoing example, if September 30, 1954, was the last day on which the United States group with respect to the M Corporation existed, B would still be required to return his assumed dividend as income for the fiscal year ending November 30, 1955, even though September 30, 1954, the date as of which the distribution is assumed to have been made, does not fall within such fiscal year.
(e) For the treatment of gain on the sale of certain stock, see section 306(f) and paragraph (h) of § 1.306-3.
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Treas. Reg. §1.551-2(a)The undistributed foreign personal holding company income is included only in the gross income of the United States shareholders who were shareholders in the company on the last day of its taxable year on which a United States group (as defined in section 552(a)(2)) existed with respect to the company.
The undistributed foreign personal holding company income is included only in the gross income of the United States shareholders who were shareholders in the company on the last day of its taxable year on which a United States group (as defined in section 552(a)(2)) existed with respect to the company. Such United States shareholders, accordingly, are determined by the stock holdings as of such specified time. This rule applies to every United States shareholder who was a shareholder in the company at the specified time regardless of whether the United States shareholder is included within the United States group. For example, a domestic corporation which is a United States shareholder at the specified time must return its distributive share in the undistributed foreign personal holding company income even though the domestic corporation cannot be included within the United States group since, under section 554, the stock it owns in the foreign corporation is considered as being owned proportionately by its shareholders for the purpose of determining whether the foreign corporation is a foreign personal holding company.
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Treas. Reg. §1.551-2(b)The United States shareholders must include in their gross income their distributive shares of that proportion of the undistributed foreign personal holding company income for the taxable year of the company which is equal in ratio to that which the portion of the taxable year up to and including the last day on which the United States group with respect to the company existed bears to the entire taxable year.
The United States shareholders must include in their gross income their distributive shares of that proportion of the undistributed foreign personal holding company income for the taxable year of the company which is equal in ratio to that which the portion of the taxable year up to and including the last day on which the United States group with respect to the company existed bears to the entire taxable year. Thus, if the last day in the taxable year on which the required United States group existed was also the end of the taxable year, the portion of the taxable year up to and incding such last day would be equal to 100 percent and, in such case, the United States shareholders would be required to return their distributive shares in the entire undistributed foreign personal holding company income. But if the last day on which the required United States group existed was September 30, and the taxable year was a calendar year, the portion of the taxable year up to and including such last day would be equal to nine-twelfths and, in that case, the United States shareholders would be required to return their distributive shares in only nine-twelfths of the undistributed foreign personal holding company income.
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Treas. Reg. §1.551-2(c)The amount which each United States shareholder must return is that amount which he would have received as a dividend if the above-specified portion of the undistributed foreign personal holding company income had in fact been distributed by the foreign personal holding company as a dividend on the last day of its taxable year on which the required United States group existed.
The amount which each United States shareholder must return is that amount which he would have received as a dividend if the above-specified portion of the undistributed foreign personal holding company income had in fact been distributed by the foreign personal holding company as a dividend on the last day of its taxable year on which the required United States group existed. Such amount is determined, therefore, by the interest of the United States shareholder in the foreign personal holding company, that is, by the number of shares of stock owned by the United States shareholder and the relative rights of his class of stock, if there are several classes of stock outstanding. Thus, if a foreign personal holding company has both common and preferred stock outstanding and the preferred shareholders are entitled to a specified dividend before any distribution may be made to the common shareholders, then the assumed distribution of the stated portion of the undistributed foreign personal holding company income must first be treated as a payment of the specified dividend on the preferred stock before any part may be allocated as a dividend on the common stock.
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Treas. Reg. §1.551-2(d)The assumed distribution of the required portion of the undistributed foreign personal holding company income must be returned as dividend income by the United States shareholders for their respective taxable years in which or with which the taxable year of the foreign personal holding company ends.
The assumed distribution of the required portion of the undistributed foreign personal holding company income must be returned as dividend income by the United States shareholders for their respective taxable years in which or with which the taxable year of the foreign personal holding company ends. For example, if the M Corporation, whose taxable year is the calendar year, is a foreign personal holding company for 1954 and if A, one of its United States shareholders, makes returns on a calendar year basis, while B, another United States shareholder, makes returns on the basis of a fiscal year ending November 30, A must return his assumed dividend as income for the taxable year 1954 and B must return his distributive share as income for the fiscal year ending November 30, 1955. In applying this rule, the date as of which the United States group last existed with respect to the company is immaterial. Thus, in the foregoing example, if September 30, 1954, was the last day on which the United States group with respect to the M Corporation existed, B would still be required to return his assumed dividend as income for the fiscal year ending November 30, 1955, even though September 30, 1954, the date as of which the distribution is assumed to have been made, does not fall within such fiscal year.
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Treas. Reg. §1.551-2(e)For the treatment of gain on the sale of certain stock, see section 306(f) and paragraph (h) of § 1.
For the treatment of gain on the sale of certain stock, see section 306(f) and paragraph (h) of § 1.306-3.
53 Citing Cases
§ 551 for the definition of “agency action”). The February 11, 2014, letters to Mr. Haber and Diversified reflect proposed reasoning and potential future action, not “final action” taken by the Commissioner. Cf. Comput. Scis. Corp. v. Commissioner, No. 4823-21, 165 T.C., slip op. at 15–19 (Oct. 6, 2025) (discussing the Administrative Procedure Act
Therefore, summary judgment serves as a mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and is not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Van Bemmelen v. Commissioner, 155 T.C. at 79. Petitioner contends that responde
A deficiency case in the Tax Court is not a review of an agency action pursuant to the APA. See Ax v. Commissioner, 146 T.C. 153 (2016). Petitioners contend that an audit for 2004 determined that they intended to make a profit from their ranch. A taxpayer’s liability is based on the merits and not on any previous record developed at the a
§§ 551–559, 701–706, in promulgating Treasury Regulation § 1.482-1(h)(2) (2006). The answer to this question is relevant because “deference [under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984),] is not warranted where the regulation is ‘procedurally defective’—that is, where the agency errs by failing to follo
§ 551(4) (1994), which defined a “rule” as “the whole or a part of an agency statement of general or particular applicability and future effect.” Bergerco, 129 F.3d at 192 n.2 (emphasis added) (citing Bowen, 488 U.S. at 216 (Scalia, J., concurring)). 11 OFAC’s use of the October 18 criteria, irrespective of the agency’s motive in deferring action
On January 7, 2022, petitioner filed a written objection to respondent’s third Motions for Partial Summary Judgment. Petitioner’s principal argument is that respondent cannot assess penalties under section 6662A as a matter of law. On February 11, 2022, respondent filed a written objection to petitioner’s Cross-Motions for Summa
551(1)(B)), with McQuiston v. Commissioner, 78 T.C. 807, 810-812 (1982) (holding that this Court is not a “court of the United States” for purposes of 28 U.S.C. sec. 451), aff’d, 711 F.2d 1064 (9th Cir. 1983). In 1988 we certified a question to the Supreme Court of Montana. See Grant Creek Water Works, Ltd. v. Commissioner, 91 T.C. 322 (1988).
551 (2012) provides in pertinent part as follows: "For the purpose ofthis subchapter--(1) 'agency' means each authority ofthe Government ofthe United States, whether or not it is within or subject to review by another agency, but does not include--(A) the Congress, (B) the courts ofthe United States". -28- torts committed within the scope oft
Unlike section 951, various other Code sections expressly characterize certain types o items as distributions or dividends. See, e.g., sec. S4A(g) (as,enacted in 2008, providing that allocation to S corporation·shareholders of a tax credit. with respect to certain bonda "shall be treated as a distribution"); secs. 302(a) 304(a), 305(c) (all providing identically that certain redemptions "shall be treated as a . distribution"); sec. 551(b) 'providing that certaïn undistributed foreign personal ho
551-557 (1994) should apply to the sec . 6320/6330 hearing . Respondent has stated in procedural regulations that a hearing under sections 6320 and 6330 is not under the formal hearing provisions of the Administrative Procedure Act . See sec . 301 .6320-1(d)(2), Q&A-D6, Proced . & Admin . Regs . ; sec. 301 .6330-1(d)(2), Q&A-D6, Proced . & Adm
do not apply to * * * [section 6330 hearings]”. Sec. 301.6330-1(d), A-D6, Proced. & Admin. Regs. This regulation also provides that a face-to-face interview is not required at a section 6330 hearing and that a taxpayer does not have the right to subpoena and examine witnesses. Sec. 301.6330-1(d), Proced. & Admin. Regs. Accordingl