Editorial Notes
Amendments
2018—Subsec. (j)(3). Pub. L. 115–141 substituted “and 933” for “, 933, and 936”.
2017—Subsec. (h)(1)(B). Pub. L. 115–97 substituted “907” for “902, 907,”.
1999—Subsec. (i)(1). Pub. L. 106–170 substituted “section 1221(a)” for “section 1221”.
1996—Subsec. (b)(2). Pub. L. 104–188 substituted “863” for “863(b)”.
1993—Subsec. (b). Pub. L. 103–66 inserted at end “Notwithstanding the preceding sentence, any income from the sale of any unprocessed timber which is a softwood and was cut from an area in the United States shall be sourced in the United States and the rules of sections 862(a)(6) and 863(b) shall not apply to any such income. For purposes of the preceding sentence, the term ‘unprocessed timber’ means any log, cant, or similar form of timber.”
1990—Subsec. (c)(3)(B). Pub. L. 101–508 substituted “section 168(g)(4)” for “section 48(a)(2)(B)”.
1988—Subsec. (d)(2). Pub. L. 100–647, § 1012(d)(12), inserted “franchise,” after “trade brand,”.
Subsec. (d)(4). Pub. L. 100–647, § 1012(d)(1), added par. (4).
Subsec. (e)(1)(A). Pub. L. 100–647, § 1012(d)(2), (9), substituted “(d)(1)(B) or (3)” for “(d)” and “in a foreign country” for first reference to “outside the United States”.
Subsec. (e)(2)(B). Pub. L. 100–647, § 1012(d)(5), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “Subparagraph (A) shall not apply to—
“(i) any sale of inventory property which is sold for use, disposition, or consumption outside the United States if an office or other fixed place of business of the taxpayer outside the United States materially participated in the sale, or
“(ii) any amount included in gross income under section 951(a)(1)(A).”
Subsec. (f). Pub. L. 100–647, § 1012(d)(4), amended subsec. (f) generally. Prior to amendment, subsec. (f) read as follows: “If—
“(1) a United States resident sells stock in an affiliate which is a foreign corporation,
“(2) such affiliate is engaged in the active conduct of a trade or business, and
“(3) such sale occurs in the foreign country in which the affiliate derived more than 50 percent of its gross income for the 3-year period ending with the close of the affiliate’s taxable year immediately preceding the year during which such sale occurred,
any gain from such sale shall be sourced outside the United States.”
Subsec. (g)(1)(A)(i). Pub. L. 100–647, § 1012(d)(11), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “any individual who has a tax home (as defined in section 911(d)(3)) in the United States, and”.
Subsec. (g)(1)(A)(ii). Pub. L. 100–647, § 1012(d)(3)(A), struck out “partnership,” after “corporation,”.
Subsec. (g)(3). Pub. L. 100–647, § 1012(d)(6)(A), added par. (3).
Subsec. (h). Pub. L. 100–647, § 1012(d)(8), added subsec. (h) and redesignated former subsec. (h) as (i).
Pub. L. 100–647, § 1012(d)(3)(B), added par. (5) to subsec. (h) prior to redesignation as subsec. (i).
Subsec. (i). Pub. L. 100–647, § 1012(d)(8), redesignated former subsec. (h) as (i). Former subsec. (i) redesignated (j).
Pub. L. 100–647, § 1012(d)(6)(B), added par. (3) to subsec. (i) prior to redesignation as subsec. (j).
Subsec. (i)(5). Pub. L. 100–647, § 1012(d)(3)(B), added par. (5) to subsec. (h) prior to redesignation as subsec. (i).
Subsec. (j). Pub. L. 100–647, § 1012(d)(8), redesignated former subsec. (i) as (j). Former subsec. (j) redesignated (k).
Subsec. (j)(3). Pub. L. 100–647, § 1012(d)(6)(B), added par. (3) to subsec. (i) prior to redesignation as subsec. (j).
Subsec. (k). Pub. L. 100–647, § 1012(d)(8), redesignated former subsec. (j) as (k).
Statutory Notes and Related Subsidiaries
Effective Date of 1993 Amendment
Pub. L. 103–66, title XIII, § 13239(e), Aug. 10, 1993, 107 Stat. 509, provided that:
“The amendments made by this section [amending this section and sections
927,
954, and
993 of this title] shall apply to
sales, exchanges, or other
dispositions after the date of the enactment of this Act [
Aug. 10, 1993].”
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1012(d)(5), Nov. 10, 1988, 102 Stat. 3497, provided that the amendment made by that section is effective with respect to taxable years beginning after Dec. 31, 1987.
Amendment by section 1012(d)(1)–(4), (6), (8), (9), (11), (12) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date
Pub. L. 99–514, title XII, § 1211(c), Oct. 22, 1986, 100 Stat. 2536, provided that:
“(1) In general.—
Except as provided in paragraph (2), the amendments made by this section [enacting this section, amending sections
861 to
864,
871,
881, and
904 of this title, and enacting provisions set out below] shall apply to taxable years beginning after
December 31, 1986.
“(2) Special rule for foreign persons.—
In the case of any foreign person other than any
controlled foreign corporations (within the meaning of section 957(a) of the
Internal Revenue Code of 1954 [now 1986]), the amendments made by this section shall apply to transactions entered into after
March 18, 1986.”
Savings Provision
For provisions that nothing in amendment by Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title.
For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.
Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For nonapplication of amendment by section 1211(a) of Pub. L. 99–514 (enacting this section) to the extent application of such amendment would be contrary to any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the provision of Pub. L. 99–514 to which such amendment relates, see section 1012(aa)(3), (4) of Pub. L. 100–647, set out as a note under section 861 of this title.
Study of Source Rules for Sales of Inventory Property
Pub. L. 99–514, title XII, § 1211(d), Oct. 22, 1986, 100 Stat. 2536, directed Secretary of the Treasury or his delegate to conduct a study of source rules for sales of inventory property and, not later than Sept. 30, 1987 (due date extended to Jan. 1, 1992, by Pub. L. 101–508, title XI, § 11831(b), Nov. 5, 1990, 104 Stat. 1388–559), to submit to Committee on Ways and Means of House of Representatives and Committee on Finance of Senate a report of such study (together with recommendations he deemed advisable).