
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC853]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
Subchapter M--Regulated Investment Companies and Real Estate Investment 
                                 Trusts
 
                 PART I--REGULATED INVESTMENT COMPANIES
 
Sec. 853. Foreign tax credit allowed to shareholders


(a) General rule

    A regulated investment company--
        (1) more than 50 percent of the value (as defined in section 
    851(c)(4)) of whose total assets at the close of the taxable year 
    consists of stock or securities in foreign corporations, and
        (2) which meets the requirements of section 852(a) for the 
    taxable year,

may, for such taxable year, elect the application of this section with 
respect to income, war profits, and excess profits taxes described in 
section 901(b)(1), which are paid by the investment company during such 
taxable year to foreign countries and possessions of the United States.

(b) Effect of election

    If the election provided in subsection (a) is effective for a 
taxable year--
        (1) the regulated investment company--
            (A) shall not, with respect to such taxable year, be allowed 
        a deduction under section 164(a) or a credit under section 901 
        for taxes to which subsection (a) is applicable, and
            (B) shall be allowed as an addition to the dividends paid 
        deduction for such taxable year the amount of such taxes;

        (2) each shareholder of such investment company shall--
            (A) include in gross income and treat as paid by him his 
        proportionate share of such taxes, and
            (B) treat as gross income from sources within the respective 
        foreign countries and possessions of the United States, for 
        purposes of applying subpart A of part III of subchapter N, the 
        sum of his proportionate share of such taxes and the portion of 
        any dividend paid by such investment company which represents 
        income derived from sources within foreign countries or 
        possessions of the United States.

(c) Notice to shareholders

    The amounts to be treated by the shareholder, for purposes of 
subsection (b)(2), as his proportionate share of--
        (1) taxes paid to any foreign country or possession of the 
    United States, and
        (2) gross income derived from sources within any foreign country 
    or possession of the United States,

shall not exceed the amounts so designated by the company in a written 
notice mailed to its shareholders not later than 60 days after the close 
of its taxable year.

(d) Manner of making election and notifying shareholders

    The election provided in subsection (a) and the notice to 
shareholders required by subsection (c) shall be made in such manner as 
the Secretary may prescribe by regulations.

(e) Treatment of taxes not allowed as a credit under section 901(k)

    This section shall not apply to any tax with respect to which the 
regulated investment company is not allowed a credit under section 901 
by reason of section 901(k).

(f) Cross references

            (1) For treatment by shareholders of taxes paid to foreign 
        countries and possessions of the United States, see section 
        164(a) and section 901.
            (2) For definition of foreign corporation, see section 
        7701(a)(5).

(Aug. 16, 1954, ch. 736, 68A Stat. 272; Pub. L. 88-272, title II, 
Sec. 229(a)(3), Feb. 26, 1964, 78 Stat. 99; Pub. L. 94-455, title XIX, 
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 99-514, title 
VI, Sec. 655(a)(3), Oct. 22, 1986, 100 Stat. 2299; Pub. L. 105-34, title 
X, Sec. 1053(b), Aug. 5, 1997, 111 Stat. 943; Pub. L. 105-206, title VI, 
Sec. 6010(k)(1), (2), July 22, 1998, 112 Stat. 815.)


                               Amendments

    1998--Subsec. (c). Pub. L. 105-206, Sec. 6010(k)(2), struck out at 
end ``Such notice shall also include the amount of such taxes which 
(without regard to the election under this section) would not be 
allowable as a credit under section 901(a) to the regulated investment 
company by reason of section 901(k).''
    Subsecs. (e), (f). Pub. L. 105-206, Sec. 6010(k)(1), added subsec. 
(e) and redesignated former subsec. (e) as (f).
    1997--Subsec. (c). Pub. L. 105-34 inserted at end ``Such notice 
shall also include the amount of such taxes which (without regard to the 
election under this section) would not be allowable as a credit under 
section 901(a) to the regulated investment company by reason of section 
901(k).''
    1986--Subsec. (c). Pub. L. 99-514 substituted ``60 days'' for ``45 
days''.
    1976--Subsec. (d). Pub. L. 94-455 struck out ``or his delegate'' 
after ``Secretary''.
    1964--Subsec. (c). Pub. L. 88-272 substituted ``45 days'' for ``30 
days''.


                    Effective Date of 1998 Amendment

    Amendment by Pub. L. 105-206 effective, except as otherwise 
provided, as if included in the provisions of the Taxpayer Relief Act of 
1997, Pub. L. 105-34, to which such amendment relates, see section 6024 
of Pub. L. 105-206, set out as a note under section 1 of this title.


                    Effective Date of 1997 Amendment

    Section 1053(c) of Pub. L. 105-34 provided that: ``The amendments 
made by this section [amending this section and section 901 of this 
title] shall apply to dividends paid or accrued more than 30 days after 
the date of the enactment of this Act [Aug. 5, 1997].''


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-514 applicable to taxable years beginning 
after Oct. 22, 1986, see section 655(b) of Pub. L. 99-514, set out as a 
note under section 852 of this title.


                    Effective Date of 1964 Amendment

    Amendment by Pub. L. 88-272 applicable to taxable years of regulated 
investment companies ending on or after Feb. 26, 1964, see section 
229(c) of Pub. L. 88-272, set out as a note under section 852 of this 
title.

                  Section Referred to in Other Sections

    This section is referred to in sections 855, 901 of this title.
