§951 — Amounts included in gross income of United States shareholders

Commissioner, supra, was "in effect overruled by Helvering v.

Unlike section 951, various other Code sections expressly characterize certain types o items as distributions or dividends.

at 1006 (adding sections 951- 964).5 Section 951 provides that a U.S.

at 1006 (adding sections 951- 964).5 Section 951 provides that a U.S.

shareholder's gross income pursuant to section 951, the distribution then reduces the CFC's E&P.

Income Inclusions Determined by Respondent Respondent determined in the FPAAs that SIHP had income inclusions pursuant to section 951(a)(1) for the tax years in issue as a result ofSIHL/SEHL's and STS' guaranties ofthe SIG notes.

Section 951 requires a U.S.

Anderson must therefore recognize a pro rata share of Gold & Appel's so-called subpart F income pursuant to section 951 .

Section 951 provides that each United States shareholder of a CFC shall include in gross income certain amounts, including “his pro rata share * * * of the * * * [CFC’s] subpart F income” for the taxable year.

The term “controlled foreign corporation” is defined in section 957(a).7 Section 951 provides that each U.S.

property (for brevity, section 951 inclusions) constitute qualified dividend income under section l(h)(ll).

rasonics was $7,919,758 at the close - 9 - ofthe first quarter ofFYE 2008. That balance remained constant for the succeed- ing seven calendar quarters. Ultrasonics had previously included $2,184,843 of these trade receivables in gross income under section 951. After CUM ceased its manufacturing operations, those operations were transferred to ACTM, which rented manufacturing facilities from CUM. ACTM continued to purchase raw materials from Ultrasonics to use in manufacturing its products and li

Section 951 provides that each U.S. shareholder of a CFC shall include in gross income certain amounts, including “his pro rata share * * * of the * * * [cfc’s] subpart F income” for the taxable year. Sec. 951(a)(l)(A)(i). Subpart F income includes “foreign base company income (as determined under section 954)”. Sec. 952(a)(2). Pursuant to section

adjusted basis of Schlegel GmbH. Respondent maintains that the adjusted basis is $4,047,993, and petitioner argues that the adjusted basis should also include interest income of $675,227 that Schlegel GmbH reported on its 1988 tax return pursuant to section 951. Section 961 provides that the basis of a U.S. shareholder’s stock in a controlled foreign corporation is increased by the amount included in the shareholder’s gross income under section 951. Section 961(b), however, provides that the bas

Section 951 provides that each U.S. shareholder of a controlled foreign corporation shall include in gross income certain amounts, including “his pro rata share (determined under section 956(a)(2)) of the corporation’s increase in earnings invested in United States property”. In pertinent part, section 956 provides: SEC. 956(a). General Rules. — Fo

487, 730. 9 controversies without litigation. See § 7803(e)(3); see also Tucker I, 135 T.C. at 136 (citing IRS Document 7225, supra, at 3–6). Before the enactment of the CDP regime, Appeals operated primarily pursuant to regulation. See Tucker I, 135 T.C. at 134–36, 153 n.69 (noting that Appeals was “originally a creature of regula

cket No. 28040-14. Filed February 24, 2025. ————— P is a domestic corporation and parent of two tiers of foreign corporations, with a domestic partnership (DP) interposed between the two tiers. For 2007 and 2008 DP included in its gross income under I.R.C. § 951 the subpart F income of the lower tier of foreign corporations as well as amounts determined under I.R.C. § 956. DP made no distributions to its partners in 2007 or 2008, and P did not increase its gross income on account of DP’s inclusi

And Treasury apparently agreed, confirming by regulation that, for purposes of the new regime, section 951 inclusions would qualify as deemed distributions.

487, 730 (codified as amended at § 7441).7 Congress intentionally designed the Tax Court, like its predecessors the BTA and the TCUS, to be the exclusive forum for pre-payment review of 7 As amended in 2015, section 7441 adds: “The Tax Court is not an agency of, and shall be independent of, the executive branch of the Government.”

at 730. By statute this Court is “not an agency of * * * the Government” but is, rather, a “court of record” 2We have considered a similar question in other contexts. Compare Nappi v. Commissioner, 58 T.C. 282, 284 (1972) (holding that this Court is a “court of the United States” for purposes of 5 U.S.C. sec. 551(1)(B)), with McQ

have treated as our own the precedent established by the Board ofTax Appeals, the predecessor ofthis Court. See Smith v. Commissioner, 91 T.C. 1049, 1053 (1988), M, 926 F.2d 1470 (6th Cir. 1991); see also Tax Reform Act of 1969, Pub. L. No. 91-172, sec. 951, 83 Stat. at 730; Revenue Act of 1942, ch. 619, sec. 504(a), 56 Stat. at 957. - 88 - cated that an allocation ofthis sort was "a matter ofdiscretion with the Commis- sioner." Ibid. "In matters intrusted to the discretion ofadministrative offi

-63- [*63] As petitioner correctly notes, neither section 951 nor section 956 applies to the transactions at issue.

And petitioners have admitted that the E&P attribut- able to this writeoff, which were not previously included in Hopper US' gross income under section 951, constitute previously untaxed E&P under section 959(c)(3).

at 730, Congress deleted from I.R.C. sec. 7441 the designation ofthe Tax Court as an independent agency within the executive branch. In 1971 we said that under the 1969 Act the Tax Court is no longer within the executive branch. Burns, Stix Friedman & Co. v. Commissioner, 57 T.C. 392 (1971). Ps also adopt the view that the Tax Co

These theories included the contention that the Lighthouse structure lacked economic substance or was a "sham"; that Boiler Riffle was a "controlled foreign corporation" (CFC) whose income was taxable to petitionerunder section 951 through the Chalk Hill Trust; and that petitioner should be deemed to own the assets in the separate accounts under the "investor control" doctrine.

These theories included the contention that the Lighthouse structure lacked economic substance or was a “sham”; that Boiler Riffle was a “controlled foreign corporation” (CFC) whose income was taxable to petitioner under section 951 through the Chalk Hill Trust; and that petitioner should be deemed to own the assets in the separate accounts under the “investor control” doctrine.

Under section 951, subject to various restrictions and qualifications, U.S. shareholders ofa CFC are taxed directly on their pro rata share ofthe CFC's earnings that are invested in certain types ofU.S. property (section 951 inclusion). Secs. 951(a)(1)(B), 956(a).4° U.S. property includes, inter alia, stock and debt of U.S. corporations. See sec. 956(c)(

section 951, (2) abused his position as a member ofthe board ofregents by failing to disclose (a) that he had a personal financial interest in matters pendirig before the board, and (b) that he was affiliated with members ofthe California Civil Rights Initiative, and (3) organized ACRC and ACRI to deceive California voters and cause them to support

951- A(8) (2012). Ifa court awards a lump-sum spousal support payment,7 the payment is due and owing upon the entry ofa finaljudgment. See Chow v. Chow, 704 6The amending order providedthat, except for the termination of"Spousal Support", the divorcejudgment remained in full force and effect. Therefore, the amending order effectively excised t

2Among HP's foreign affiliates were several CFCs within the meaning of sec.

references are to the Internal Revenue Code (Code) as amended and in effect for the years in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure. Among HP’s foreign affiliates were several CFCs within the meaning of sec. 951. These CFCs, pursuant to sec. 41(f)(5), were also members of HP’s “controlled group of corporations”. On June 12, 2003, HP filed amended returns for its 1999 and 2000 tax years to reduce the AAGR (included in line 1(c)) by gross receipts accr

- 5 - Substantive Principles--Taxation of Subpart F Income Section 951 sets forth the operative rules governing treatment of subpart F income and provides in pertinent part as follows: SEC.

487, 73C, the Tax Court became a legislative court under Article I of the :onstitution. See sec. 7441; Freytag v. Commissioner, 501 U.S. 168, 887 (1991) (Congress enacted legislation in 1969 with the express purpose of making the Tax Court an Article I court rather than an executive agency). Thus, the Tax Court exercises judicial

--- Guardian Services --- ($1,251,891) Stanford Financial --- ($ 154,474) Total $2,789,722 ($1,406,365) As indirect owners of Guardian Bank and as required under section 951, petitioners reported on their 1990 joint Federal income tax return the above $2,789,722 subpart F income of Guardian Bank.

ng other entities, Guardian Bank and deficits in the earnings and profits of Guardian Services and Stanford Financial, as follows: Subpart F income Deficits in earnings & profits Guardian Bank $2,789,722 Guardian Services ($1,251,891) Stanford Financial (154,474) Total 2,789,722 (1,406,365) As indirect owners of Guardian Bank and as required under section 951, petitioners reported on their 1990 joint Federal income tax return the above $2,789,722 subpart F income of Guardian Bank.