Table 1 to paragraph (b)(2)(iv)(B)
M's subpart F income for Year 1 | $100x | |
Less: Reduction under section 951(a)(2)(A) for period (1-1 through 5-26) during which M is not a controlled foreign corporation ($100x * 146/365) | 40x | |
Subpart F income for Year 1 as limited by section 951(a)(2)(A) | 60x | |
A's pro rata share of subpart F income as determined under section 951(a)(2)(A) (0.6 * $60x) | 36x | |
Less: Reduction under section 951(a)(2)(B) for dividends received by B during Year 1 with respect to the stock of M acquired by A: | ||
(i) Dividend received by B ($15x), multiplied by a fraction ($100x/$100x), the numerator of which is the subpart F income of such corporation for the taxable year ($100x) and the denominator of which is the sum of the subpart F income and the tested income of such corporation for the taxable year ($100x) ($15x * ($100x/$100x)) | 15x | |
(ii) B's pro rata share (60%) of the amount which bears the same ratio to the subpart F income of such corporation for the taxable year ($100x) as the part of such year during which A did not own (within the meaning of section 958(a)) such stock bears to the entire taxable year (146/365) (0.6 * $100x * (146/365)) | 24x | |
(iii) Amount of reduction under section 951(a)(2)(B) (lesser of (i) or (ii)) | 15x | |
A's pro rata share of subpart F income as determined under section 951(a)(2) | 21x |
Table 1 to paragraph (b)(2)(vi)(B)(1)
R's subpart F income for Year 1 | $100x | |
Less: Reduction under section 951(a)(2)(A) for period (1-1 through 3-14) during which R is not a controlled foreign corporation ($100x * 73/365) | 20x | |
Subpart F income for Year 1 as limited by section 951(a)(2)(A) | 80x | |
A's pro rata share of subpart F income as determined under section 951(a)(2)(A) (0.6 * $80x) | 48x | |
Less: Reduction under section 951(a)(2)(B) for dividends received by B during Year 1 with respect to the stock of R indirectly acquired by A: | ||
(i) Dividend received by B ($100x) multiplied by a fraction ($100x/$400x), the numerator of which is the subpart F income of such corporation for the taxable year ($100x) and the denominator of which is the sum of the subpart F income and the tested income of such corporation for the taxable year ($400x) ($100x * ($100x/$400x)) | 25x | |
(ii) B's pro rata share (60%) of the amount which bears the same ratio to the subpart F income of such corporation for the taxable year ($100x) as the part of such year during which A did not own (within the meaning of section 958(a)) such stock bears to the entire taxable year (73/365) (0.6 * $100x * (73/365)) | 12x | |
(iii) Amount of reduction under section 951(a)(2)(B) (lesser of (i) or (ii)) | 12x | |
A's pro rata share of subpart F income as determined under section 951(a)(2) | 36x |
Table 1 to paragraph (b)(2)(vi)(B)(2)
R's tested income for Year 1 | $300x | |
Less: Reduction under section 951(a)(2)(A) for period (1-1 through 3-14) during which R is not a controlled foreign corporation ($300x * 73/365) | 60x | |
Tested income for Year 1 as limited by under section 951(a)(2)(A) | 240x | |
A's pro rata share of tested income as determined under § 1.951A-1(d)(2) (0.6 * $240x) | 144x | |
Less: Reduction under section 951(a)(2)(B for dividends received by B during Year 1 with respect to the stock of R indirectly acquired by A: | ||
(i) Dividend received by B ($100x) multiplied by a fraction ($300x/$400x), the numerator of which is the tested income of such corporation for the taxable year ($300x) and the denominator of which is the sum of the subpart F income and the tested income of such corporation for the taxable year ($400x) ($100x * ($300x/$400x)) | 75x | |
(ii) B's pro rata share (60%) of the amount which bears the same ratio to the tested income of such corporation for the taxable year ($300x) as the part of such year during which A did not own (within the meaning of section 958(a)) such stock bears to the entire taxable year (73/365) (0.6 * $300x * (73/365)) | 36x | |
(iii) Amount of reduction under section 951(a)(2)(B) (lesser of (i) or (ii)) | 36x | |
A's pro rata share of tested income under section 951A(e)(1) | 108x |
Example. On June 30, 1963, United States person E acquires 70 of the 100 shares of the only class of stock of foreign corporation A from nonresident alien B, who until such time owns all such 100 shares. E sells 10 shares of stock of such corporation on November 30, 1963, and 60 shares on December 31, 1963, to nonresident alien F. Corporation A is a controlled foreign corporation for the period beginning with July 1, 1963, and extending through December 31, 1963. As to the 10 shares of stock sold on November 30, 1963, E is treated as not owning such shares at any time after November 30, 1963, nor before July 1, 1963. As to the remaining 60 shares of stock, E is treated as not owning them before July 1, 1963, or after December 31, 1963.
26 C.F.R. §1.951-1