Title 26 — Internal Revenue Code
Part III · Chapter 1 — Normal Taxes and Surtaxes
§ 958. Rules for determining stock ownership
Statutory text
Direct and indirect ownership
General rule
For purposes of this subpart (other than section 960), stock owned means—
stock owned directly, and
stock owned with the application of paragraph (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 (within the meaning of section 7701(a)(31)) 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.
Special rule for mutual insurance companies
For purposes of applying paragraph (1) in the case of a foreign mutual insurance company, the term “stock” shall include any certificate entitling the holder to voting power in the corporation.
Constructive ownership
For purposes of sections 951(b), 954(d)(3), 956(c)(2), and 957, section 318(a) (relating to constructive ownership of stock) shall apply to the extent that the effect is to treat any United States person as a United States shareholder within the meaning of section 951(b), to treat a person as a related person within the meaning of section 954(d)(3), to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(c)(2), or to treat a foreign corporation as a controlled foreign corporation under section 957, except that—
In applying paragraph (1)(A) of section 318(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign estate) shall not be considered as owned by a citizen or by a resident alien individual.
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.
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).
Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.
Paragraphs (1) and (4) shall not apply for purposes of section 956(c)(2) to treat stock of a domestic corporation as not owned by a United States shareholder.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Revenue Act of 1962
Pub. L. 87–834 § 12(a) · 76 Stat. 960
Enacted · 26 U.S.C. § 958
Added Pub. L. 87–834, § 12(a), Oct. 16, 1962, 76 Stat. 1018
Source evidence
Code source credit
Added Pub. L. 87–834, § 12(a), Oct. 16, 1962, 76 Stat. 1018Pub. L. 88–554 § 4(b)(5) · 78 Stat. 761
Redesignated · 26 U.S.C. § 958(b)
Pub. L. 88–554 redesignated pars. (4) and (5) as (3) and (4), respectively
Struck · 26 U.S.C. § 958(b)
Pub. L. 88–554 struck out former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for purposes of applying 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 changes made in section 318 of this title by Pub. L. 88–554
Source evidence
Code amendment note
Subsec. (b). Pub. L. 88–554 redesignated pars. (4) and (5) as (3) and (4), respectively, struck out former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for purposes of applying 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 changes made in section 318 of this title by Pub. L. 88–554.Enacted provision · exact public law section
(5) Section 958(b) of such Code (relating to constructive ownership) 76 Stat. 1018. 26 USC 958. is amended— (A) by striking out “the first sentence of subparagraphs (A) and (B), and in applying clause (i) of subparagraph (C),” in paragraph (2) and insert mg in lieu thereof “subparagraphs (A), (B), and (C)”; (B) by striking out paragraph (3); (C) by striking out “(4) In applying clause (i) of subparagraph (C)” and inserting in lieu thereof “(3) In applying subparagraph (C)”; and (D) by striking out “(5) The second sentence of subparagraphs (A) and (B), and clause (ii) of subparagraph (C), of section 318(a)(2)” and inserting in lieu thereof “(4) Subparagraphs (A), (B), and (C) of section 318(a)(3)”.Pub. L. 94–455 title X § 1021(b) · 90 Stat. 1520
Inserted · 26 U.S.C. § 958(b)
Pub. L. 94–455 inserted “956(b)(2)” after “purposes of sections 951(b), 954(d)(3),”, “to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2)” after “meaning of section 954(d)(3)” and “Paragraphs (1) and (4) shall not apply for purposes of section 956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder” following subpar. (4)
Source evidence
Code amendment note
Subsec. (b). Pub. L. 94–455 inserted “956(b)(2)” after “purposes of sections 951(b), 954(d)(3),”, “to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2)” after “meaning of section 954(d)(3)” and “Paragraphs (1) and (4) shall not apply for purposes of section 956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder” following subpar. (4).Enacted provision · exact public law section
(b) Constructive Ownership of Stock.— Section 958(b) (relating 26 USC 958. to rules for determining stock ownership) is amended— (1) by striking out “954(d)(3),” the first place it appears and inserting in lieu thereof “954(d)(3), 956(b)(2),”; (2) by striking out “954(d)(3).” the second place it appears and inserting in lieu thereof “954(d)(3), to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2),”; and (3) by adding at the end thereof the following new sentence: “Paragraphs (1) and (4) shall not apply for purposes of section 956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder.”Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1704(t)(7) · 110 Stat. 1755
Substituted · 26 U.S.C. § 958(a)(1)
Pub. L. 104–188, § 1704(t)(7), substituted “section 960(a)(1)” for “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” in introductory provisions
Source evidence
Code amendment note
Subsec. (a)(1). Pub. L. 104–188, § 1704(t)(7), substituted “section 960(a)(1)” for “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” in introductory provisions.Enacted provision · exact public law section
(7) Paragraph (1) of section 958(a) is amended by striking “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” and inserting “section 960(a)(1)”.Small Business Job Protection Act of 1996
Pub. L. 104–188 § 1703(i)(4) · 110 Stat. 1755
Substituted · 26 U.S.C. § 958(b)
Pub. L. 104–188, § 1703(i)(4), substituted “956(c)(2)” for “956(b)(2)” wherever appearing in introductory and closing provisions
Source evidence
Code amendment note
Subsec. (b). Pub. L. 104–188, § 1703(i)(4), substituted “956(c)(2)” for “956(b)(2)” wherever appearing in introductory and closing provisions.Enacted provision · exact public law section
(4) Subsection (b) of section 958 is amended by striking “956(b)(2)” each place it appears and inserting “956(c)(2)”.Pub. L. 115–97 § 14301(c)(31) · 131 Stat. 2054
Substituted · 26 U.S.C. § 958(a)(1)
Pub. L. 115–97, § 14301(c)(31), substituted “960” for “960(a)(1)” in introductory provisions
Source evidence
Code amendment note
Subsec. (a)(1). Pub. L. 115–97, § 14301(c)(31), substituted “960” for “960(a)(1)” in introductory provisions.Enacted provision · exact public law section
(31) Section 958(a)(1) is amended by striking “960(a)(1)” and inserting “960”.Pub. L. 115–97 § 14213(a)(2) · 131 Stat. 2054
Substituted · 26 U.S.C. § 958(b)
Pub. L. 115–97, § 14213(a)(2), substituted “Paragraph (1)” for “Paragraphs (1) and (4)” in concluding provisions
Source evidence
Code amendment note
Subsec. (b). Pub. L. 115–97, § 14213(a)(2), substituted “Paragraph (1)” for “Paragraphs (1) and (4)” in concluding provisions.Enacted provision · exact public law section
(2) by striking “Paragraphs (1) and (4)” in the last sentence and inserting “Paragraph (1)”.Pub. L. 115–97 § 14213(a)(1) · 131 Stat. 2054
Struck · 26 U.S.C. § 958(b)(4)
Pub. L. 115–97, § 14213(a)(1), struck out par. (4) which read as follows: “Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.”
Source evidence
Code amendment note
Subsec. (b)(4). Pub. L. 115–97, § 14213(a)(1), struck out par. (4) which read as follows: “Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.”Enacted provision · exact public law section
(1) by striking paragraph (4), andPub. L. 119–21 § 70353(a)(2) · 139 Stat. 209
Substituted · 26 U.S.C. § 958(b)
Pub. L. 119–21, § 70353(a)(2), substituted “Paragraphs (1) and (4)” for “Paragraph (1)” in concluding provisions
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b). Pub. L. 119–21, § 70353(a)(2), substituted “Paragraphs (1) and (4)” for “Paragraph (1)” in concluding provisions.Effective date note
Amendment by Pub. L. 119–21 applicable to taxable years of foreign corporations beginning after Dec. 31, 2025, see section 70353(d) of Pub. L. 119–21, set out as an Effective Date note under section 951B of this title.Pub. L. 119–21 § 70353(a)(1) · 139 Stat. 209
Added · 26 U.S.C. § 958(b)(4)
Pub. L. 119–21, § 70353(a)(1), added par. (4)
Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.
Source evidence
Code amendment note
Subsec. (b)(4). Pub. L. 119–21, § 70353(a)(1), added par. (4).Effective date note
Amendment by Pub. L. 119–21 applicable to taxable years of foreign corporations beginning after Dec. 31, 2025, see section 70353(d) of Pub. L. 119–21, set out as an Effective Date note under section 951B of this title.
8 of 11 references resolved to an enrolled provision · 1 partial · 2 unresolved
Editorial Notes
Amendments1964–2025 · 5 rounds
2025
Subsec. (b). Pub. L. 119–21, § 70353(a)(2), substituted “Paragraphs (1) and (4)” for “Paragraph (1)” in concluding provisions.
Subsec. (b)(4). Pub. L. 119–21, § 70353(a)(1), added par. (4).
2017
Subsec. (a)(1). Pub. L. 115–97, § 14301(c)(31), substituted “960” for “960(a)(1)” in introductory provisions.
Subsec. (b). Pub. L. 115–97, § 14213(a)(2), substituted “Paragraph (1)” for “Paragraphs (1) and (4)” in concluding provisions.
Subsec. (b)(4). Pub. L. 115–97, § 14213(a)(1), struck out par. (4) which read as follows: “Subparagraphs (A), (B), and (C) of section 318(a)(3) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person.”
1996
Subsec. (a)(1). Pub. L. 104–188, § 1704(t)(7), substituted “section 960(a)(1)” for “sections 955(b)(1)(A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” in introductory provisions.
Subsec. (b). Pub. L. 104–188, § 1703(i)(4), substituted “956(c)(2)” for “956(b)(2)” wherever appearing in introductory and closing provisions.
1976
Subsec. (b). Pub. L. 94–455 inserted “956(b)(2)” after “purposes of sections 951(b), 954(d)(3),”, “to treat the stock of a domestic corporation as owned by a United States shareholder of the controlled foreign corporation for purposes of section 956(b)(2)” after “meaning of section 954(d)(3)” and “Paragraphs (1) and (4) shall not apply for purposes of section 956(b)(2) to treat stock of a domestic corporation as not owned by a United States shareholder” following subpar. (4).
1964
Subsec. (b). Pub. L. 88–554 redesignated pars. (4) and (5) as (3) and (4), respectively, struck out former par. (3) which related to ownership of stock by a partnership, estate, trust, or corporation for purposes of applying 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 changes made in section 318 of this title by Pub. L. 88–554.
Statutory Notes and Related Subsidiaries
Effective Date of 2025 Amendment
Amendment by Pub. L. 119–21 applicable to taxable years of foreign corporations beginning after , see section 70353(d) of Pub. L. 119–21, set out as an Effective Date note under section 951B of this title.
Effective Date of 2017 Amendment
Pub. L. 115–97, title I, § 14213(b), , 131 Stat. 2217, provided that:
“The amendments made by this section [amending this section] shall apply to—
“(1) the last taxable year of foreign corporations beginning before , and each subsequent taxable year of such foreign corporations, and
“(2) taxable years of United States shareholders in which or with which such taxable years of foreign corporations end.”
Amendment by section 14301(c)(31) of Pub. L. 115–97 applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end, see section 14301(d) of Pub. L. 115–97, set out as a note under section 78 of this title.
Effective Date of 1996 Amendment
Amendment by section 1703(i)(4) of Pub. L. 104–188 effective as if included in the provision of the Revenue Reconciliation Act of 1993, Pub. L. 103–66, §§ 13001–13444, to which such amendment relates, see section 1703(o) of Pub. L. 104–188, set out as a note under section 39 of this title.
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455 applicable to taxable years of foreign corporations beginning after , and to taxable years of United States shareholders within which or with which such taxable years of such corporations end, see section 1021(c) of Pub. L. 94–455, set out as a note under section 956 of this title.
Effective Date of 1964 Amendment
Amendment by Pub. L. 88–554 effective , 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 occurred before , see section 4(c) of Pub. L. 88–554, set out as a note under section 318 of this title.
Construction
Amendment by Pub. L. 119–21 not to be construed to create any inference with respect to the proper application of any provision of this title with respect to taxable years beginning before the taxable years to which such amendment applies, see section 70353(f) of Pub. L. 119–21, set out as a note under section 951B of this title.
Credits
1962–2025 · 6 acts
- 1962Added Pub. L. 87–834, § 12(a), , 76 Stat. 1018
- 1964amended Pub. L. 88–554, § 4(b)(5), , 78 Stat. 763
- 1976Pub. L. 94–455, title X, § 1021(b), , 90 Stat. 1619
- 1996Pub. L. 104–188, title I, §§ 1703(i)(4), 1704(t)(7), , 110 Stat. 1876, 1887
- 2017Pub. L. 115–97, title I, §§ 14213(a), 14301(c)(31), , 131 Stat. 2217, 2224
- 2025Pub. L. 119–21, title VII, § 70353(a), , 139 Stat. 209.
Show as published
(Added Pub. L. 87–834, § 12(a), , 76 Stat. 1018; amended Pub. L. 88–554, § 4(b)(5), , 78 Stat. 763; Pub. L. 94–455, title X, § 1021(b), , 90 Stat. 1619; Pub. L. 104–188, title I, §§ 1703(i)(4), 1704(t)(7), , 110 Stat. 1876, 1887; Pub. L. 115–97, title I, §§ 14213(a), 14301(c)(31), , 131 Stat. 2217, 2224; Pub. L. 119–21, title VII, § 70353(a), , 139 Stat. 209.)