§ 959. Exclusion from gross income of previously taxed earnings and profits
(a)
Exclusion from gross income of United States persons
For purposes of this chapter, the earnings and profits of a foreign corporation attributable to amounts which are, or have been, included in the gross income of a United States shareholder under section
951
(a) shall not, when—
(2)
such amounts would, but for this subsection, be included under section
951
(a)(1)(B) in the gross income of,
such shareholder (or any other United States person who acquires from any person any portion of the interest of such United States shareholder in such foreign corporation, but only to the extent of such portion, and subject to such proof of the identity of such interest as the Secretary may by regulations prescribe) directly or indirectly through a chain of ownership described under section
958
(a), be again included in the gross income of such United States shareholder (or of such other United States person). The rules of subsection (c) shall apply for purposes of paragraph (1) of this subsection and the rules of subsection (f) shall apply for purposes of paragraph (2) of this subsection.
(b)
Exclusion from gross income of certain foreign subsidiaries
For purposes of section
951
(a), the earnings and profits of a controlled foreign corporation attributable to amounts which are, or have been, included in the gross income of a United States shareholder under section
951
(a), shall not, when distributed through a chain of ownership described under section
958
(a), be also included in the gross income of another controlled foreign corporation in such chain for purposes of the application of section
951
(a) to such other controlled foreign corporation with respect to such United States shareholder (or to any other United States shareholder who acquires from any person any portion of the interest of such United States shareholder in the controlled foreign corporation, but only to the extent of such portion, and subject to such proof of identity of such interest as the Secretary may prescribe by regulations).
(c)
Allocation of distributions
For purposes of subsections (a) and (b), section
316(a) shall be applied by applying paragraph (2) thereof, and then paragraph (1) thereof—
(1)
first to the aggregate of—
(A)
earnings and profits attributable to amounts included in gross income under section
951
(a)(1)(B) (or which would have been included except for subsection (a)(2) of this section), and
(B)
earnings and profits attributable to amounts included in gross income under section
951
(a)(1)(C) (or which would have been included except for subsection (a)(3) of this section),
with any distribution being allocated between earnings and profits described in subparagraph (A) and earnings and profits described in subparagraph (B) proportionately on the basis of the respective amounts of such earnings and profits,
(e)
Coordination with amounts previously taxed under section
1248
For purposes of this section and section
960
(b), any amount included in the gross income of any person as a dividend by reason of subsection (a) or (f) of section
1248 shall be treated as an amount included in the gross income of such person (or, in any case to which section
1248
(e) applies, of the domestic corporation referred to in section
1248
(e)(2)) under section
951
(a)(1)(A).