This part rewrites how a shareholder's share of a foreign firm's income is worked out. A holder counts if they held shares on any day in the year. The share follows the stock held and the days it was held. The changes start with foreign firm tax years after December 31, 2025.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70354 in the PDF
What the document says
“each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder's pro rata share”
The section rewrites subsection (a) of section 951 of the Internal Revenue Code of 1986. Where a foreign corporation is a controlled foreign corporation at any time in its taxable year, each United States shareholder owning stock in it on any day of that year counts its pro rata share of the corporation's subpart F income, and each shareholder owning stock on the last day of that year on which the corporation is a controlled foreign corporation counts the amount worked out under section 956, so far as not excluded under section 959(a)(2).
What the document actually says
“each United States shareholder which owns (within the meaning of section 958(a)) stock in such corporation on any day during the CFC year shall include in gross income such shareholder's pro rata share”
That sentence, in plain words
A holder counts if they held shares on any day of the year. That holder must count a share of the firm's income.
What this is about
The year is the one when the firm was foreign controlled. A second rule uses the last such day. That one covers a different amount.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70354 in the PDF
What the document says
“A United States shareholder's pro rata share of a controlled foreign corporation's subpart F income for a CFC year shall be the portion of such income which is attributable to--”
The section works out the share as the portion of the income attributable to the stock owned by the shareholder and to any period of the year during which the shareholder owned that stock, was a United States shareholder of the corporation, and the corporation was a controlled foreign corporation.
What the document actually says
“A United States shareholder's pro rata share of a controlled foreign corporation's subpart F income for a CFC year shall be the portion of such income which is attributable to--”
That sentence, in plain words
The share is the part of the income tied to two things. Those two things follow below.
What this is about
One is the stock the holder owned. The other is the days it was held. All three tests must hold at once for a day to count.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70354 in the PDF
What the document says
“Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder's taxable year which includes the last day on which the shareholder owns (within the meaning of section 958(a)) stock in the controlled foreign corporation during such CFC year.”
The section provides that an amount a United States shareholder must count for a CFC year goes into gross income for the shareholder's taxable year that includes the last day of that CFC year on which the shareholder owned stock in the corporation.
What the document actually says
“Any amount required to be included in gross income by a United States shareholder under paragraph (1) with respect to a CFC year shall be included in gross income for the shareholder's taxable year which includes the last day on which the shareholder owns (within the meaning of section 958(a)) stock in the controlled foreign corporation during such CFC year.”
That sentence, in plain words
The amount goes into one tax year of the holder. That is the year holding the last day the holder owned the shares.
What this is about
That day falls inside the firm's own tax year. The holder's year may differ from the firm's. This rule ties the two together.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall”Who acts: Secretary of the TreasuryHow: statuteSec. 70354 in the PDF
What the document says
“The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance allowing taxpayers to elect, or requiring taxpayers, to close the taxable year of a controlled foreign corporation upon a direct or indirect disposition of stock of such corporation.”
The section requires the Secretary to prescribe regulations or guidance to carry out the subsection, including rules letting taxpayers elect, or requiring them, to close the taxable year of a controlled foreign corporation on a direct or indirect disposition of its stock.
What the document actually says
“The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this subsection, including regulations or other guidance allowing taxpayers to elect, or requiring taxpayers, to close the taxable year of a controlled foreign corporation upon a direct or indirect disposition of stock of such corporation.”
That sentence, in plain words
The Secretary must write rules for this part. They may let a firm close its tax year when shares are sold. They may also require it.
What this is about
A sale can be direct or through a chain. Closing the year fixes the count at that point. The choice may rest with the taxpayer.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
“in paragraph (2), by striking "the last day in the taxable year of such foreign corporation on which such foreign corporation is a controlled foreign corporation" and inserting "any day in such taxable year".”
The section strikes from paragraphs (1)(A) and (1)(B) of section 951A(b) of the Internal Revenue Code of 1986 the words tying tested income to the foreign corporation's year ending in or with the shareholder's year, and amends section 951A(c) so that paragraph (1) points to section 951(a)(3) and paragraph (2) reads any day in such taxable year.
What the document actually says
“in paragraph (2), by striking "the last day in the taxable year of such foreign corporation on which such foreign corporation is a controlled foreign corporation" and inserting "any day in such taxable year".”
That sentence, in plain words
A long phrase is taken out of a tax rule. The words any day in such taxable year are put in.
What this is about
The old phrase named only the last qualifying day. The new one reaches any day. A matching change is made in the rule before it.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
The document says “shall apply”Who acts: Secretary of the TreasuryHow: statuteSec. 70354 in the PDF
What the document says
“The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025.”
The section applies its amendments to taxable years of foreign corporations beginning after December 31, 2025. Except as the Secretary provides, a dividend paid or deemed paid by a controlled foreign corporation is not treated as a dividend under the older section 951(a)(2)(B) where it was paid on or before June 28, 2025 in a year including that date and the shareholder did not own the stock in the part of the year up to that date, or was paid after that date and before the corporation's first taxable year beginning after December 31, 2025, and where it does not raise the taxable income of a United States person subject to federal income tax.
What the document actually says
“The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 2025.”
That sentence, in plain words
The changes start with foreign firm tax years that begin after December 31, 2025. Older years are left out.
What this is about
A special rule covers some payouts in between. Those are not treated as dividends under the old rule. Two tests must be met for that.
No action is recorded against this proposal. That is not evidence that none has been taken, and nobody has yet read it against the record. See what the tracker does not yet cover.
Each distinct thing the section does: the rewritten inclusion rule for subpart F income and for section 956 amounts, the way a pro rata share is worked out, the year the amount is counted in, the rulemaking power including closing a foreign firm's tax year on a disposition, the coordination changes with section 951A, and the effective dates with the transition rule for dividends.
Nothing in the section is left out. Each of its subsections is recorded.
The section works by rewriting section 951(a) and amending section 951A of the Internal Revenue Code of 1986, and points to sections 956, 958 and 959, none of which is indexed here.
