§ 958. Rules for determining stock ownership
(a)
Direct and indirect ownership
(2)
Stock ownership through foreign entities
For purposes of subparagraph (B) of paragraph (1), stock owned, directly or indirectly, by or for a foreign corporation, foreign partnership, or foreign trust or foreign estate (within the meaning of section
7701
(a)(31)) shall be considered as being owned proportionately by its shareholders, partners, or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person.
(b)
Constructive ownership
For purposes of sections
951
(b),
954
(d)(3),
956
(c)(2), and
957, section
318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder within the meaning of section
951
(b), to treat a person as a related person within the meaning of section
954
(d)(3), to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section
956
(c)(2), or to treat a foreign corporation as a controlled foreign corporation under section
957, except that—
(1)
In applying paragraph (1)(A) of section
318
(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign estate) shall not be considered as owned by a citizen or by a resident alien individual.
(2)
In applying subparagraphs (A), (B), and (C) of section
318
(a)(2), if a partnership, estate, trust, or corporation owns, directly or indirectly, more than 50 percent of the total combined voting power of all classes of stock entitled to vote of a corporation, it shall be considered as owning all the stock entitled to vote.
(3)
In applying subparagraph (C) of section
318
(a)(2), the phrase “10 percent” shall be substituted for the phrase “50 percent” used in subparagraph (C).