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TITLE 26-INTERNAL REVENUE CODE the reinsurance or the issuing of insurance or annuity contracts described in section 953(a)(1) exceeds 75 percent of the gross amount of all premiums or other consideration in respect of all risks. (c) Corporations organized in United States posses- sions For purposes of this subpart, the term "con- trolled foreign corporation" does not include any corporation created or organized in the Commonwealth of Puerto Rico or a possession of the United States or under the laws of the Commonwealth of Puerto Rico or a possession of the United States if- (1) 80 percent or more of the gross income of such corporation for the 3-year period im- mediately preceding the close of the taxable year (or for such part of such period immedi- ately preceding the close of such taxable year as may be applicable) was derived from sources within the Commonwealth of Puerto Rico or a possession of the United States; and (2) 50 percent or more of the gross income of such corporation for such period, or for such part thereof, was derived from the active conduct within the Commonwealth of Puerto Rico or a possession of the United States of any trades or businesses constituting the manufacture or processing of goods, wares, merchandise, or other tangible personal prop- erty; the processing of agricultural or horti- cultural products or commodities (including but not limited to livestock, poultry, or fur- bearing animals); the catching or taking of any kind of fish or the mining or extraction of natural resources, or any manufacturing or processing of any products or commodities ob- tained from such activities; or the ownership or operation of hotels. For purposes of paragraphs (1) and (2), the de- termination as to whether income was derived from sources within the Commonwealth of Puerto Rico or a possession of the United States and was derived from the active conduct of a described trade or business within the Commonwealth of Puerto Rico or a possession of the United States shall be made under regu. lations prescribed by the Secretary. (d) United Statis person For purposes of this subpart, the term "United States person" has the meaning as- signed to it by section 7701(a)(30) except that- (1) with respect to a corporation organized under the laws of the Commonwealth of Puerto Rico, such term does not include an individual who is a bona fide resident of Puerto Rico, if a dividend received by such in- dividual during the taxable year from such corporation would, for purposes of section 933(1), be treated as income derived from sources within Puerto Rico, (2) with respect to a corporation organized under the laws of the Virgin Islands, such term does not include an individual who is a bona fide resident of the Virgin Islands and whose income tax obligation under this subti- tle for the taxable year is satisfied pursuant to section 28(a) of the Revised Organic Act of the Virgin Islands, approved July 22, 1954 (48 U.S.C. 1642), by paying tax on income derived from all sources both within and outside the Virgin Islands into the treasury of the Virgin Islands, and (3) with respect to a corporation organized under the laws of any other possession of the United States, such term does not include an individual who is a bona fide resident of any such other possession and whose income de- rived from sources within possessions of the United States is not, by reason of section 931(a), includible in gross income under this subtitle for the taxable year, (Added Pub. L. 87-834, § 12(a), Oct. 16, 1962, 76 Stat. 1017, and amended Pub. L. 94-455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834.) AMENnMmErN 1976-Subsec. (c) Pub. L. 94-455 struck out "or his delegate" following "Secretary". SECTION REnER TO IN OTHER SECTIONS This section is referred to in sections 951, 958, 970, 971, 1248 of this title. § 958. Rules for determining stock ownership (a) Direct and indirect ownership (1) General rule For purposes of this subpart (other than sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)), stock owned means- (A) stock owned directly, and (B) stock owned with the application of paragraph (2). (2) Stock ownership through foreign entities For purposes of subparagraph (B) of para- graph (1), stock owned, directly or indirectly, by or for a foreign corporation, foreign part- nership, or foreign trust or foreign estate (within the meaning of section 7701(a)(31)) shall be considered as being owned propor- tionately by its shareholders, partners, or beneficiaries. Stock considered to be owned by a person by reason of the application of the preceding sentence shall, for purposes of applying such sentence, be treated as actually owned by such person. (3) Special rule for mutual insurance companies For purposes of applying paragraph (1) in the case of a foreign mutual insurance compa- ny, the term "stock" shall include any certifi- cate entitling the holder to voting power in the corporation. (b) Constructive ownership For purposes of sections 951(b), 954(d)(3), 956(b)(2), and 957, section 318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder within the meaning of section 951(b), to treat a person as a related person within the meaning of section 954(d)(3), to treat the stock of a do- mestic corporation as owned by a United States shareholder of the controlled foreign corpora- tion for purposes of section 956(b)(2), or to treat a foreign corporation as a controlled for- eign corporation under section 957, except that- (1) In applying paragraph (1)(A) of section 318(a), stock owned by a nonresident alien in- dividual (other than a foreign trust or foreign § 958 Page 610