§ 898. Taxable year of certain foreign corporations

• (a) For purposes of this title, the taxable year of any specified foreign corporation shall be the required year determined under subsection (c).
• (b) For purposes of this section—
  • (1) The term “specified foreign corporation” means any foreign corporation—
    • (A) which is treated as a controlled foreign corporation for any purpose under subpart F of part III of this subchapter, and
    • (B) with respect to which the ownership requirements of paragraph (2) are met.
  • (2)
    • (A) The ownership requirements of this paragraph are met with respect to any foreign corporation if a United States shareholder owns, on each testing day, more than 50 percent of—
      • (i) the total voting power of all classes of stock of such corporation entitled to vote, or
      • (ii) the total value of all classes of stock of such corporation.
    • (B) For purposes of subparagraph (A), the rules of subsections (a) and (b) of section 958 shall apply in determining ownership.
  • (3) The term “United States shareholder” has the meaning given to such term by section 951(b), except that, in the case of a foreign corporation having related person insurance income (as defined in section 953(c)(2)), the Secretary may treat any person as a United States shareholder for purposes of this section if such person is treated as a United States shareholder under section 953(c)(1).
• (c)
  • (1) The required year is—
    • (A) the majority U.S. shareholder year, or
    • (B) if there is no majority U.S. shareholder year, the taxable year prescribed under regulations.
  • (2) A specified foreign corporation may elect, in lieu of the taxable year under paragraph (1)(A), a taxable year beginning 1 month earlier than the majority U.S. shareholder year.
  • (3)
    • (A) For purposes of this subsection, the term “majority U.S. shareholder year” means the taxable year (if any) which, on each testing day, constituted the taxable year of—
      • (i) each United States shareholder described in subsection (b)(2)(A), and
      • (ii) each United States shareholder not described in clause (i) whose stock was treated as owned under subsection (b)(2)(B) by any shareholder described in such clause.
    • (B) The testing days shall be—
      • (i) the first day of the corporation’s taxable year (determined without regard to this section), or
      • (ii) the days during such representative period as the Secretary may prescribe.