§909 — Suspension of taxes and credits until related income taken into account

1 cases·1 cited

Statute Text — 26 U.S.C. §909

(a)In general

If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by the taxpayer, such tax shall not be taken into account for purposes of this title before the taxable year in which the related income is taken into account under this chapter by the taxpayer.

(b)Special rules with respect to specified 10-percent owned foreign corporations

If there is a foreign tax credit splitting event with respect to a foreign income tax paid or accrued by a specified 10-percent owned foreign corporation (as defined in section 245A(b) without regard to paragraph (2) thereof), such tax shall not be taken into account—

(1)

for purposes of section 960, or

(2)

for purposes of determining earnings and profits under section 964(a),

before the taxable year in which the related income is taken into account under this chapter by such specified 10-percent owned foreign corporation or a domestic corporation which is a United States shareholder with respect to such specified 10-percent owned foreign corporation.

(c)Special rules

For purposes of this section—

(1)Application to partnerships, etc.

(2)Treatment of foreign taxes after suspension

In the case of any foreign income tax not taken into account by reason of subsection (a) or (b), except as otherwise provided by the Secretary, such tax shall be so taken into account in the taxable year referred to in such subsection (other than for purposes of section 986(a)) as a foreign income tax paid or accrued in such taxable year.

In the case of a partnership, subsections (a) and (b) shall be applied at the partner level. Except as otherwise provided by the Secretary, a rule similar to the rule of the preceding sentence shall apply in the case of any S corporation or trust.

(d)Definitions

For purposes of this section—

(1)Foreign tax credit splitting event

There is a foreign tax credit splitting event with respect to a foreign income tax if the related income is (or will be) taken into account under this chapter by a covered person.

(2)Foreign income tax

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

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

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.

(e)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 provides—

(1)

appropriate exceptions from the provisions of this section, and

(2)

for the proper application of this section with respect to hybrid instruments.

Treasury Regulations

Treas. Reg. §Treas. Reg. §1.909-0 Outline of regulation provisions for section 909
Treas. Reg. §Treas. Reg. §1.909-0(a) Foreign tax credit splitting event.
Treas. Reg. §Treas. Reg. §1.909-0(b) Pre-2011 splitter arrangements.
Treas. Reg. §Treas. Reg. §1.909-0(c) General rules for applying section 909 to pre-2011 split taxes and related income.
Treas. Reg. §Treas. Reg. §1.909-0(d) Special rules regarding related income.
Treas. Reg. §Treas. Reg. §1.909-0(e) Special rules regarding pre-2011 split taxes.
Treas. Reg. §Treas. Reg. §1.909-0(f) Rules relating to partnerships and trusts.
Treas. Reg. §Treas. Reg. §1.909-0(g) Interaction between section 909 and other Code provisions.
Treas. Reg. §Treas. Reg. §1.909-0(h) Effective/applicability date.
Treas. Reg. §Treas. Reg. §1.909-0(i) In general.
Treas. Reg. §Treas. Reg. §1.909-0(v) Related income from a loss-sharing splitter arrangement.
Treas. Reg. §Treas. Reg. §1.909-1 Definitions and special rules
Treas. Reg. §Treas. Reg. §1.909-1(a) Definitions.
Treas. Reg. §Treas. Reg. §1.909-1(b) Taxes paid or accrued by a partnership, S corporation or trust.
Treas. Reg. §Treas. Reg. §1.909-1(c) Related income of a partnership, S corporation or trust.
Treas. Reg. §Treas. Reg. §1.909-1(d) Application of section 909 to pre-1987 accumulated profits and pre-1987 foreign income taxes.
Treas. Reg. §Treas. Reg. §1.909-1(e) Effective/applicability date.
Treas. Reg. §Treas. Reg. §1.909-1(i) §1.909-1(i)
Treas. Reg. §Treas. Reg. §1.909-2 Splitter arrangements
Treas. Reg. §Treas. Reg. §1.909-2(a) Foreign tax credit splitting event—(1) In general.
Treas. Reg. §Treas. Reg. §1.909-2(b) Splitter arrangements.
Treas. Reg. §Treas. Reg. §1.909-2(c) Effective/applicability date.
Treas. Reg. §Treas. Reg. §1.909-2(v) Related income from a loss-sharing splitter arrangement.
Treas. Reg. §Treas. Reg. §1.909-3 Rules regarding related income and split taxes
Treas. Reg. §Treas. Reg. §1.909-3(a) Interim rules for identifying related income and split taxes.

1 Citing Cases

Byrne v. Commissioner 65 T.C. 473 · 1975