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to such owners a pro rata share of subpart F income. Section
958(a) gives the following guidance on the question of stock
ownership:
SEC. 958(a). Direct and Indirect Ownership.--
(1) General rule.--For purposes of this
subpart * * *, 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
paragraph (1), stock owned, directly or
indirectly, by or for a foreign corporation,
foreign partnership, or foreign trust or foreign
estate * * * shall be considered as being owned
proportionately 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.
In addition, regulations promulgated under section 958
provide rules of application supplementing the statutory text:
Amount of interest in foreign corporation, foreign
partnership, foreign trust, or foreign estate. The
determination of a person’s proportionate interest in a
foreign corporation, foreign partnership, foreign
trust, or foreign estate will be made on the basis of
all the facts and circumstances in each case.
Generally, in determining a person’s proportionate
interest in a foreign corporation, the purpose for
which the rules of section 958(a) and this section are
being applied will be taken into account. Thus, if the
rules of section 958(a) are being applied to determine
the amount of stock owned for purposes of section
951(a), a person’s proportionate interest in a foreign
corporation will generally be determined with reference
to such person’s interest in the income of such
corporation. If the rules of section 958(a) are being
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Last modified: May 25, 2011