26 USC 882 - Tax on income of foreign corporations connected with United States business

U.S Code last checked for updates: Jan 18, 2025

§ 882.

Tax on income of foreign corporations connected with United States business

(a)

Imposition of tax

(1)

In general

(2)

Determination of taxable income

(3)

[Cross reference 2

 Par. (3) heading editorially supplied.

]

(b)

Gross income

In the case of a foreign corporation, except where the context clearly indicates otherwise, gross income includes only—

(1)

gross income which is derived from sources within the United States and which is not effectively connected with the conduct of a trade or business within the United States, and

(2)

gross income which is effectively connected with the conduct of a trade or business within the United States.

(c)

Allowance of deductions and credits

(1)

Allocation of deductions

(A)

General rule

(B)

Charitable contributions

(2)

Deductions and credits allowed only if return filed

(3)

Foreign tax credit

(4)

Cross reference

(d)

Election to treat real property income as income connected with United States business

(1)

In general

A foreign corporation which during the taxable year derives any income—

(A)

from real property located in the United States, or from any interest in such real property, including (i) gains from the sale or exchange of real property or an interest therein, (ii) rents or royalties from mines, wells, or other natural deposits, and (iii) gains described in section 631(b) or (c), and

(B)

which, but for this subsection, would not be treated as income effectively connected with the conduct of a trade or business within the United States,

may elect for such taxable year to treat all such income as income which is effectively connected with the conduct of a trade or business within the United States. In such case, such income shall be taxable as provided in subsection (a)(1) whether or not such corporation is engaged in trade or business within the United States during the taxable year. An election under this paragraph for any taxable year shall remain in effect for all subsequent taxable years, except that it may be revoked with the consent of the Secretary with respect to any taxable year.

(2)

Election after revocation, etc.

(e)

Interest on United States obligations received by banks organized in possessions

In the case of a corporation created or organized in, or under the law of, a possession of the United States which is carrying on the banking business in a possession of the United States, interest on obligations of the United States which is not portfolio interest (as defined in section 881(c)(2)) shall—

(1)

for purposes of this subpart, be treated as income which is effectively connected with the conduct of a trade or business within the United States, and

(2)

shall be taxable as provided in subsection (a)(1) whether or not such corporation is engaged in trade or business within the United States during the taxable year.

(f)

Returns of tax by agent

(Aug. 16, 1954, ch. 736, 68A Stat. 282; Pub. L. 89–809, title I, § 104(b)(1), Nov. 13, 1966, 80 Stat. 1555; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 95–600, title III, § 301(b)(13), Nov. 6, 1978, 92 Stat. 2822; Pub. L. 96–499, title XI, § 1122(c)(2), Dec. 5, 1980, 94 Stat. 2687; Pub. L. 97–424, title V, § 515(b)(6)(F), Jan. 6, 1983, 96 Stat. 2182; Pub. L. 98–369, div. A, title IV, § 474(r)(19), July 18, 1984, 98 Stat. 843; Pub. L. 99–514, title VII, § 701(e)(4)(F), title XII, § 1236(a), Oct. 22, 1986, 100 Stat. 2343, 2576; Pub. L. 100–647, title I, § 1012(s)(2)(B), title II, § 2001(c)(2), title VI, § 6133(a), Nov. 10, 1988, 102 Stat. 3527, 3594, 3721; Pub. L. 113–295, div. A, title II, § 221(a)(12)(F), Dec. 19, 2014, 128 Stat. 4038; Pub. L. 115–97, title I, §§ 12001(b)(14), 13001(b)(2)(L), 14401(d)(2), Dec. 22, 2017, 131 Stat. 2094, 2097, 2233; Pub. L. 117–169, title I, § 10101(a)(4)(E), Aug. 16, 2022, 136 Stat. 1822.)

cite as: 26 USC 882