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TITLE 26-INTERNAL REVENUE CODE 1976-Pub. L, 94-455, § 1053(b), added provision re- lating to exclusion of dividend distributions to resi- dents of Formosa or Hong Kong for taxable years 1976 and 1977 and simplified table of percentage reduc- tions. EmrcvE. DATE or 1976 AMENDMENT Amendment by Pub. L. 94-455 applicable with re- spect to taxable years beginning after Dec. 31, 1975, see section 1053(e) of Pub. L. 94-455, set out as an Ef- fective Date of 1976 Amendment note under section 941 of this title. SUBPART F-CONTROLLED FOREIGN CORPORATIONS Sec. 951. Amounts included in gross income of United States shareholders. 952. Subpart F income defined. 953. Income from insurance of United States risks. 954. Foreign base company income. 955. Withdrawal of previously excluded subpart F income from qualified Investment. 956. Investment of earnings In United States proper- ty. 957. Controlled foreign corporations; United States persons. 958. Rules for determining stock ownership. 959. Exclusion from gross income of previously taxed earnings and profits. 960. Special rules for foreign tax credit. 961. Adjustments to basis of stock in controlled for- eign corporations and of other property. 962. Election by individuals to be subject to tax at corporate rates. [963. Repealed.] 964. Miscellaneous provisions. AumDmENTs 1975-Pub. L. 94-12, title VI, § 602(a)(3)(A), (c)(7), (d)(3)(B), Mar. 29, 1975, 89 Stat. 58, 60, 64 struck out existing item 955 and replaced it with an identical item 955 and struck out item 963 "Receipt of minimum distributions by domestic corporations". 1962-Pub. L. 87-834, § 12(a), Oct. 16, 1962, 76 Stat. 1006, added the heading of Subpart F, and items 951- 964. SusPART REImUM TO IN OTHER SECTIONS This subpart is referred to in sections 970, 999 of this title. § 951. Amounts included in gross income of United States shareholders (a) Amounts included (1) In general If a foreign corporation is a controlled for- eign corporation for an uninterrupted period of 30 days or more during any taxable year, every person who is a United States share- holder (as defined in subsection (b)) of such corporation and who owns (within the mean- ing of section 958(a)) stock in such corpora- tion on the last day, in such year, on which such corporation is a controlled foreign cor- poration shall include in his gross income, for his taxable year tn which or with which such taxable year of the corporation ends- (A) the sum of- (i) his pro rata share (determined under paragraph (2)) of the corporation's sub- part P income for such year, (it) his pro rata share (determined under section 955(a)(3) as in effect before the enactment of the Tax Reduction Act of 1975) of the corporation's previously excluded subpart F income withdrawn from investment in less developed coun- tries for such year, and (iii) his pro rata share (determined under section 955(a)(3)) of the corpora- tion's previously excluded subpart F income withdrawn from foreign base com- pany shipping operations for such year; and, (B) his pro rata share (determined under section 956(a)(2)) of the corporation's in- crease in earnings invested in United States property for such year (but only to the extent not excluded from gross income under section 959(a)(2)). (2) Pro rata share of subpart F income (The pro rata share referred to in para- graph (1)(A)(i) in the case of any United States shareholder is the amount- (A) which would have been distributed with respect to the stock which such share- holder owns (within the meaning of section 958(a)) in such corporation if on the last day, in its taxable year, on which the corpo- ration is a controlled foreign corporation it had distributed pro rata to its shareholders an amount (I) which bears the same ratio to its subpart F income for the taxable year, as (ii) the part of such year during which the corporation is a controlled foreign cor- poration bears to the entire year, reduced by (B) the amount of distributions received by any other person during such year as a dividend with respect to such stock, but only to the extent of the dividend which would have been received if the distribution by the corporation had been the amount (I) which bears the same ratio to the subpart F income of such corporation for the taxable year, as (ii) the part of such year during which such shareholder did not own (within the meaning of section 958(a)) such stock bears to the entire year. (3) Limitation on pro rata share of previously ex- cluded subpart F income withdriwn from in. vestment For purposes of paragraph (1)(A)(iii), the pro rata share of any United States share- holder of the previously excluded subpart P income of a controlled foreign corporation withdrawn from investment in foreign base company shipping operations shall not exceed an amount- (A) which bears the same ratio to his pro rata share of such income withdrawn (as de- termined under section 955(a)(3)) for the taxable year, as (B) the part of such year during which the corporation is a controlled foreign cor- poration bears to the entire year. (4) Limitation on pro rata share of investment in United States property For purposes of paragraph (1)(B), the pro rata share of any United States shareholder in the increase of the earnings of a controlled foreign corporation invested in United States property shall not exceed an amount (A) which bears the same ratio to his pro rata share of such increase (as determined under section 956(a)(2)) for the taxable year, as (B) Page 601