§ 960.
(b)
Special rules for distributions from previously taxed earnings and profits
For purposes of subpart A of this part—
(1)
In general
If any portion of a distribution from a controlled foreign corporation to a domestic corporation which is a United States shareholder with respect to such controlled foreign corporation is excluded from gross income under section 959(a), such domestic corporation shall be deemed to have paid so much of such foreign corporation’s foreign income taxes as—
(A)
are properly attributable to such portion, and
(B)
have not been deemed to have to
been paid by such domestic corporation under this section for the taxable year or any prior taxable year.
(2)
Tiered controlled foreign corporations
If section 959(b) applies to any portion of a distribution from a controlled foreign corporation to another controlled foreign corporation, such controlled foreign corporation shall be deemed to have paid so much of such other controlled foreign corporation’s foreign income taxes as—
(A)
are properly attributable to such portion, and
(B)
have not been deemed to have been paid by a domestic corporation under this section for the taxable year or any prior taxable year.
(c)
Special rules for foreign tax credit in year of receipt of previously taxed earnings and profits
(1)
Increase in section 904 limitation
In the case of any taxpayer who—
(A)
either (i) chose to have the benefits of subpart A of this part for a taxable year beginning after September 30, 1993, in which he was required under section 951(a) to include any amount in his gross income, or (ii) did not pay or accrue for such taxable year any income, war profits, or excess profits taxes to any foreign country or to any possession of the United States,
(B)
chooses to have the benefits of subpart A of this part for any taxable year in which he receives 1 or more distributions or amounts which are excludable from gross income under section 959(a) and which are attributable to amounts included in his gross income for taxable years referred to in subparagraph (A), and
(C)
for the taxable year in which such distributions or amounts are received, pays, or is deemed to have paid, or accrues income, war profits, or excess profits taxes to a foreign country or to any possession of the United States with respect to such distributions or amounts,
the limitation under section 904 for the taxable year in which such distributions or amounts are received shall be increased by the lesser of the amount of such taxes paid, or deemed paid, or accrued with respect to such distributions or amounts or the amount in the excess limitation account as of the beginning of such taxable year.
(2)
Excess limitation account
(A)
Establishment of account
(B)
Increases in account
For each taxable year beginning after September 30, 1993, the taxpayer shall increase the amount in the excess limitation account by the excess (if any) of—
(i)
the amount by which the limitation under section 904(a) for such taxable year was increased by reason of the total amount of the inclusions in gross income under section 951(a) for such taxable year, over
(ii)
the amount of any income, war profits, and excess profits taxes paid, or deemed paid, or accrued to any foreign country or possession of the United States which were allowable as a credit under section 901 for such taxable year and which would not have been allowable but for the inclusions in gross income described in clause (i).
Proper reductions in the amount added to the account under the preceding sentence for any taxable year shall be made for any increase in the credit allowable under section 901 for such taxable year by reason of a carryback if such increase would not have been allowable but for the inclusions in gross income described in clause (i).
(3)
Distributions of income previously taxed in years beginning before October 1, 1993
(4)
Cases in which taxes not to be allowed as deduction
In the case of any taxpayer who—
(A)
chose to have the benefits of subpart A of this part for a taxable year in which he was required under section 951(a) to include in his gross income an amount in respect of a controlled foreign corporation, and
(B)
does not choose to have the benefits of subpart A of this part for the taxable year in which he receives a distribution or amount which is excluded from gross income under section 959(a) and which is attributable to earnings and profits of the controlled foreign corporation which was included in his gross income for the taxable year referred to in subparagraph (A),
no deduction shall be allowed under section 164 for the taxable year in which such distribution or amount is received for any income, war profits, or excess profits taxes paid or accrued to any foreign country or to any possession of the United States on or with respect to such distribution or amount.
(5)
Insufficient taxable income
(d)
Deemed paid credit for taxes properly attributable to tested income
(1)
In general
For purposes of subpart A of this part, if any amount is includible in the gross income of a domestic corporation under section 951A, such domestic corporation shall be deemed to have paid foreign income taxes equal to 80 percent of the product of—
(A)
such domestic corporation’s inclusion percentage, multiplied by
(B)
the aggregate tested foreign income taxes paid or accrued by controlled foreign corporations.
(2)
Inclusion percentage
For purposes of paragraph (1), the term “inclusion percentage” means, with respect to any domestic corporation, the ratio (expressed as a percentage) of—
(A)
such corporation’s global intangible low-taxed income (as defined in section 951A(b)), divided by
(B)
the aggregate amount described in section 951A(c)(1)(A) with respect to such corporation.
(3)
Tested foreign income taxes
(Added [Pub. L. 87–834, § 12(a)], Oct. 16, 1962, [76 Stat. 1020]; amended [Pub. L. 94–455, title X], §§ 1031(b)(1), 1033(b)(2), 1037(a), Oct. 4, 1976, [90 Stat. 1622], 1628, 1633; [Pub. L. 99–514, title XII, § 1202(b)], Oct. 22, 1986, [100 Stat. 2530]; [Pub. L. 103–66, title XIII, § 13233(b)(1)], Aug. 10, 1993, [107 Stat. 502]; [Pub. L. 105–34, title XI, § 1113(b)], Aug. 5, 1997, [111 Stat. 971]; [Pub. L. 111–226, title II, § 214(a)], Aug. 10, 2010, [124 Stat. 2399]; [Pub. L. 115–97, title I], §§ 14201(b)(1), 14301(b), Dec. 22, 2017, [131 Stat. 2212], 2221.)