26 C.F.R. § 1.926(a)-1 Distributions to shareholders.
Title 26 - Internal Revenue
(a) Treatment of distributions. [Reserved] For guidance, see §1.926(a)–1T(a). (b) Order of distribution—(1) In general—(i) Distributions by a FSC received by a shareholder in a taxable year of the shareholder beginning before January 1, 1990. Any actual distribution to a shareholder by a FSC (all references to a FSC in this section shall include a small FSC and a former FSC) that is received by the shareholder in a taxable year of the shareholder beginning before January 1, 1990, and made out of earnings and profits shall be treated as made in the following order, to the extent thereof— (A) Out of earnings and profits attributable to exempt foreign trade income determined solely because of operation of section 923(a)(4), (B) Out of earnings and profits attributable to other exempt foreign trade income, (C) Out of earnings and profits attributable to non-exempt foreign trade income determined under either of the administrative pricing methods of section 925(a)(1) or (2), (D) Out of earnings and profits attributable to section 923(a)(2) non-exempt income, and (E) Out of other earnings and profits. (ii) Distributions by a FSC received by a shareholder in a taxable year of the shareholder beginning after December 31, 1989. Any actual distribution to a shareholder by a FSC that is received by the shareholder in a taxable year beginning after December 31, 1989, and that is made out of earnings and profits shall be treated as made in the following order, to the extent thereof— (A) Out of earnings and profits attributable to exempt foreign trade income determined solely because of the operation of section 923(a)(4), (B) Out of earnings and profits attributable to foreign trade income (other than exempt foreign trade income determined solely because of the operation of section 923(a)(4)) allocable to the marketing of agricultural or horticultural products (or the providing of related services) by a qualified cooperative which is a shareholder of the FSC, (C) Out of earnings and profits attributable to non-exempt foreign trade income and other exempt foreign trade income determined under either of the administrative pricing methods of section 925(a)(1) and (2). Distributions out of this classification will be made on a pro rata basis so that 15/23 (16/23 with regard to distribution to a non-corporate shareholder) of each distribution will be out of earnings and profits attributable to exempt foreign trade income and the remainder will be out of earnings and profits attributable to non-exempt foreign trade income. To the extent the distributions are out of earnings and profits attributable to the disposition of, or services related to, military property, 7.5/23 (8/23 with regard to distributions to a non-corporate shareholder) of each distribution will be out of earnings and profits attributable to exempt foreign trade income and the remainder will be out of earnings and profits attributable to non-exempt foreign trade income, (D) Out of earnings and profits attributable to other exempt foreign trade income determined under the transfer pricing method of section 925(a)(3), (E) Out of earnings and profits attributable to section 923(a)(2) non-exempt income, (F) Out of earnings and profits attributable to effectively connected income, as defined in section 245(c)(4)(B), and (G) Out of other earnings and profits. (2) Determination of earnings and profits. [Reserved] For guidance, see §1.926(a)–1T(b)(1). (c) Definition of “former FSC”. [Reserved] For guidance, see §1.926(a)–1T(c). (d) Personal holding company income. [Reserved] For guidance, see §1.926(a)–1T(d). (e) Sale of stock if section 1248 applies. [Reserved] For guidance, see §1.926(a)–1T(e). [T.D. 8340, 56 FR 11093, Mar. 15, 1991]
Title 26: Internal Revenue
PART 1—INCOME TAXES
earned income of citizens of united states
§ 1.926(a)-1 Distributions to shareholders.
