§ 959.
(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—
(1)
such amounts are distributed to, or
(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.
(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,
(2)
then to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(A) (but reduced by amounts not included under subparagraph (B) or (C) of section 951(a)(1) because of the exclusions in paragraphs (2) and (3) of subsection (a) of this section), and
(3)
then to other earnings and profits.
References in this subsection to section 951(a)(1)(C) and subsection (a)(3) shall be treated as references to such provisions as in effect on the day before the date of the enactment of the Small Business Job Protection Act of 1996.
(Added [Pub. L. 87–834, § 12(a)], Oct. 16, 1962, [76 Stat. 1019]; amended [Pub. L. 94–455, title XIX, § 1906(b)(13)(A)], Oct. 4, 1976, [90 Stat. 1834]; [Pub. L. 98–369, div. A, title I, § 133(b)(1)], July 18, 1984, [98 Stat. 668]; [Pub. L. 99–514, title XII, § 1226(b)], Oct. 22, 1986, [100 Stat. 2560]; [Pub. L. 100–647, title I, § 1012(bb)(7)(A)], Nov. 10, 1988, [102 Stat. 3536]; [Pub. L. 103–66, title XIII, § 13231(c)(1)], (2), (4)(A), (B), Aug. 10, 1993, [107 Stat. 497], 498; [Pub. L. 104–188, title I, § 1501(b)(4)]–(8), Aug. 20, 1996, [110 Stat. 1826]; [Pub. L. 115–97, title I, § 14301(c)(32)], (33), Dec. 22, 2017, [131 Stat. 2224].)