Foreign source dividends; deduction; computation
Sec. 12. (a) As used in this section, the term "foreign source
dividend" means a dividend from a foreign corporation. The term
includes any amount that a taxpayer is required to include in its gross
income for a taxable year under Section 951 of the Internal Revenue
Code, but the term does not include any amount that is treated as a
dividend under Section 78 of the Internal Revenue Code.
(b) A corporation that includes any foreign source dividend in its
adjusted gross income for a taxable year is entitled to a deduction
from that adjusted gross income. The amount of the deduction equals
the product of:
(1) the amount of the foreign source dividend included in the
corporation's adjusted gross income for the taxable year;
multiplied by
(2) the percentage prescribed in subsection (c), (d), or (e), as the
case may be.
(c) The percentage referred to in subsection (b)(2) is one hundred
percent (100%) if the corporation that includes the foreign source
dividend in its adjusted gross income owns stock possessing at least
eighty percent (80%) of the total combined voting power of all
classes of stock of the foreign corporation from which the dividend
is derived.
(d) The percentage referred to in subsection (b)(2) is eighty-five
percent (85%) if the corporation that includes the foreign source
dividend in its adjusted gross income owns stock possessing at least
fifty percent (50%) but less than eighty percent (80%) of the total
combined voting power of all classes of stock of the foreign
corporation from which the dividend is derived.
(e) The percentage referred to in subsection (b)(2) is fifty percent
(50%) if the corporation that includes the foreign source dividend in
its adjusted gross income owns stock possessing less than fifty
percent (50%) of the total combined voting power of all classes of
stock of the foreign corporation from which the dividend is derived.
As added by P.L.383-1987(ss), SEC.4.
Last modified: May 28, 2006