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TITLE 26-INTERNAL REVENUE CODE estate) shall not be considered as owned by a citizen or by a resident alien individual. (2) In applying subparagraphs (A), (B), and (C) of section 318(a)(2), if a partnership, estate, trust, or corporation owns, directly or indirectly, more than 50 percent of the total combined voting power of all classes of stock entitled to vote of a corporation, it shall be considered as owning all the stock entitled to vote. (3) In applying subparagraph (C) of section 318(a)(2), the phrase "10 percent" shall be substituted for the phrase "50 percent" used in subparagraph (C). (4) Subparagraph (A), (B), and (C) of sec- tion 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owried by a person who is not a United States person. Paragraphs (1) and (4) shall not apply for pur- poses of section 956(b)(2) to treat stock of a do- mestic corporation as not owned by a United States shareholder. (Added Pub. L. 87-834, § 12(a), Oct. 16, 1962, 76 Stat. 1018, and amended Pub. L. 88-554, § 4(b)(5), Aug. 31, 1964, 78 Stat. 763; Pub. L. 94- 455, title X, § 1021(b), Oct. 4, 1976, 90 Stat. 1619.) REFERENCES IN TEXT Section 955(c)(2)(A)(ii), referred to in subsec. (a)(1), was section 955(c)(2)(A)(ii) of this title as added by Pub. L. 87-834, § 12(a), Oct. 16, 1962, 72 Stat. 1013 and was repealed by Pub. L. 94-12, title VI, § 602(c)(5), Mar. 29, 1975, 89 Stat. 59. See prior provisions note set out under section 955 of this title. AMENDMENTS 1976-Subsec. (b). Pub. L. 94-455 inserted "956(b)(2)" following "purposes of sections 951(b), 954(d)(3),", "to treat the stock of a domestic corpora- tion as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2)" following "meaning of section 954(d)(3)" and "Paragraphs (1) and (4) shall not apply for pur- poses of section 556(b)(2) to treat stock of a domestic corporation as not owned by a United States share- holder" following subpar. (4). 1964-Subsec. (b). Pub. L. 88-554 redesignated pars. (4) and (5) as (3) and (4), respectively, eliminated former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for pur- poses of applying the first sentence of subpars. (A) and (B), and subpar. (C(i) of section 318(a)(2) of this title, and made amendments throughout subsec. (b) to conform to the changes made in section 318 of this title by Pub. L. 88-554. EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94-455 applicable to taxable years of foreign corporations beginning after Dec. 31, 1975, and Lo taxable years of United States sharehold- ers within which or with which such taxable years of such corporations end, see section 1021(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 956 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment by section 4 of Pub. L. 88-554 effective Aug. 31, 1964, except that for purposes of sections 302 and 304 of this title, such amendments shall not apply to distributions in payment for stock acquisitions or redemptions, if such acquisitions or redemptions oc. curred before Aug. 31, 1964, see section 4(c) of Pub. L. 88-554 set out as an Effective Date of 1964 Amend- ment note under section 318 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 318, 545, 679, 864, 951, 952, 954, 956, 957, 959, 961, 964, 1246, 1248, 1249, 2107 of this title. § 959. Exclusion from gross income of previously taxed earnings and profits (a) Exclusion from gross income of United States persons For purposes of this chapter, the earnings and profits for a taxable year of a foreign cor- poration attributable to amounts which are, or have been, included in the gross income of a United States shareholder under section 951(a) shall not, when- (1) such amounts are distributed to, or (2) such amounts would, but for this subsec- tion, be included under section 951(a)(1)(B) in the gross income of, such shareholder (or any other United States person who acquires from any person any por- tion of the interest of such United States share- holder in such foreign corporation, but only to the extent of such portion, and subject to such proof of the identity of such interest as the Secretary may by regulations prescribe) direct- ly or indirectly through a chain of ownership described under section 958(a), be again includ- ed in the gross income of such United States shareholder (or of such other United States person). (b) Exclusion from gross income of certain foreign subsidiaries For purposes of section 951(a), the earnings and profits for a taxable year of a controlled foreign corporation attributable to amounts which are, or have been, included in the gross income of a United States shareholder under section 951(a), shall not, when distributed through a chain of ownership described under section 958(a), be also included in the gross income of another controlled foreign corpora- tion in such chain for purposes of the applica- tion of section 951(a) to such other controlled foreign corporation with respect to such United States shareholder (or to any other United States shareholder who acquires from any person any portion of the interest of such United States shareholder in the controlled for- eign corporation, but only to the extent of such portion, and subject to such proof of identity of such interest as the Secretary may prescribe by regulations). (c) Allocation of distributions For purposes of subsections (a) and (b), sec- tion 316(a) shall be applied by applying para- graph (2) thereof, and then paragraph (1) thereof- (1) first to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(B) (or which would have been included except for subsection (a)(2) of this section), (2) then to earnings and profits attributable to amounts included in gross income under section 951(a)(1)(A) (but reduced by amounts not included under section 951(a)(1)(B) be- cause of the exclusion in subsection (a)(2) of this section), and (3) then to other earnings and profits. Page 611 § 959