26 USC 367 - Foreign corporations

U.S Code last checked for updates: Nov 22, 2024

§ 367.

Foreign corporations

(a)

Transfers of property from the United States

(1)

General rule

(2)

Exception for certain stock or securities

(3)

Special rule for transfer of partnership interests

(4)

Paragraph (2) not to apply to certain section 361 transactions

(5)

Secretary may exempt certain transactions from application of this subsection

(b)

Other transfers

(1)

Effect of section to be determined under regulations

(2)

Regulations relating to sale or exchange of stock in foreign corporations

The regulations prescribed pursuant to paragraph (1) shall include (but shall not be limited to) regulations dealing with the sale or exchange of stock or securities in a foreign corporation by a United States person, including regulations providing—

(A)

the circumstances under which—

(i)

gain shall be recognized currently, or amounts included in gross income currently as a dividend, or both, or

(ii)

gain or other amounts may be deferred for inclusion in the gross income of a shareholder (or his successor in interest) at a later date, and

(B)

the extent to which adjustments shall be made to earnings and profits, basis of stock or securities, and basis of assets.

(c)

Transactions to be treated as exchanges

(1)

Section 355 distribution

(2)

Contribution of capital to controlled corporations

(d)

Special rules relating to transfers of intangibles

(1)

In general

Except as provided in regulations prescribed by the Secretary, if a United States person transfers any intangible property to a foreign corporation in an exchange described in section 351 or 361—

(A)

subsection (a) shall not apply to the transfer of such property, and

(B)

the provisions of this subsection shall apply to such transfer.

(2)

Transfer of intangibles treated as transfer pursuant to sale of contingent payments

(A)

In general

If paragraph (1) applies to any transfer, the United States person transferring such property shall be treated as—

(i)

having sold such property in exchange for payments which are contingent upon the productivity, use, or disposition of such property, and

(ii)

receiving amounts which reasonably reflect the amounts which would have been received—

(I)

annually in the form of such payments over the useful life of such property, or

(II)

in the case of a disposition following such transfer (whether direct or indirect), at the time of the disposition.

The amounts taken into account under clause (ii) shall be commensurate with the income attributable to the intangible.

(B)

Effect on earnings and profits

(C)

Amounts received treated as ordinary income

(D)

Regulatory authority

For purposes of the last sentence of subparagraph (A), the Secretary shall require—

(i)

the valuation of transfers of intangible property, including intangible property transferred with other property or services, on an aggregate basis, or

(ii)

the valuation of such a transfer on the basis of the realistic alternatives to such a transfer,

if the Secretary determines that such basis is the most reliable means of valuation of such transfers.

(3)

Regulations relating to transfers of intangibles to partnerships

(4)

Intangible property

For purposes of this subsection, the term “intangible property” means any—

(A)

patent, invention, formula, process, design, pattern, or know-how,

(B)

(C)

trademark, trade name, or brand name,

(D)

franchise, license, or contract,

(E)

method, program, system, procedure, campaign, survey, study, forecast, estimate, customer list, or technical data,

(F)

goodwill, going concern value, or workforce in place (including its composition and terms and conditions (contractual or otherwise) of its employment), or

(G)

other item the value or potential value of which is not attributable to tangible property or the services of any individual.

(e)

Treatment of distributions described in section 355 or liquidations under section 332

(1)

Distributions described in section 355

(2)

Liquidations under section 332

(f)

Other transfers

To the extent provided in regulations, if a United States person transfers property to a foreign corporation as paid-in surplus or as a contribution to capital (in a transaction not otherwise described in this section), such transfer shall be treated as a sale or exchange for an amount equal to the fair market value of the property transferred, and the transferor shall recognize as gain the excess of—

(1)

the fair market value of the property so transferred, over

(2)

the adjusted basis (for purposes of determining gain) of such property in the hands of the transferor.

(Aug. 16, 1954, ch. 736, 68A Stat. 119; Pub. L. 91–681, § 1(a), Jan. 12, 1971, 84 Stat. 2065; Pub. L. 94–455, title X, § 1042(a), Oct. 4, 1976, 90 Stat. 1634; Pub. L. 97–248, title II, § 213(d), Sept. 3, 1982, 96 Stat. 465; Pub. L. 98–369, div. A, title I, § 131(a)–(c), July 18, 1984, 98 Stat. 662–664; Pub. L. 99–514, title VI, § 631(d)(1), title XII, § 1231(e)(2), title XVIII, § 1810(g)(1), (4), Oct. 22, 1986, 100 Stat. 2272, 2563, 2828, 2829; Pub. L. 100–647, title I, § 1006(e)(13)(A), Nov. 10, 1988, 102 Stat. 3402; Pub. L. 101–508, title XI, § 11702(a)(1), Nov. 5, 1990, 104 Stat. 1388–514; Pub. L. 105–34, title XI, § 1131(b)(2), (4), (5)(A), Aug. 5, 1997, 111 Stat. 979, 980; Pub. L. 106–170, title V, § 532(c)(1)(C), Dec. 17, 1999, 113 Stat. 1930; Pub. L. 108–357, title IV, § 406(a), Oct. 22, 2004, 118 Stat. 1498; Pub. L. 115–97, title I, §§ 14102(e)(1), (2), 14221(b)(1), Dec. 22, 2017, 131 Stat. 2194, 2218; Pub. L. 115–141, div. U, title IV, § 401(d)(1)(D)(viii)(I), (II), Mar. 23, 2018, 132 Stat. 1207.)

cite as: 26 USC 367