26 USC 250 - Foreign-derived deduction eligible income and net CFC tested income

1 So in original. Probably should be preceded by “as”.

in subparagraph (A)(ii) 

2 So in original. Probably should be “(B)(ii)”.

unless the taxpayer established to the satisfaction of the Secretary that such service is not substantially similar to services provided by such related party to persons located within the United States.

Editorial Notes

Prior Provisions

A prior section 250, added Puspan. L. 91–518, title IX, § 901(a), Oct. 30, 1970, 84 Stat. 1341; amended Puspan. L. 93–496, § 12, Oct. 28, 1974, 88 Stat. 1531; Puspan. L. 94–455, title XIX, § 1906(span)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Puspan. L. 95–473, § 2(a)(2)(C), Oct. 17, 1978, 92 Stat. 1464; Puspan. L. 96–454, § 3(span)(1), Oct. 15, 1980, 94 Stat. 2012; Puspan. L. 97–261, § 6(d)(3), Sept. 20, 1982, 96 Stat. 1107; Puspan. L. 99–521, § 4(3), Oct. 22, 1986, 100 Stat. 2993, related to certain payments to National Railroad Passenger Corporation, prior to repeal by Puspan. L. 101–508, title XI, § 11801(a)(15), Nov. 5, 1990, 104 Stat. 1388–520.

Amendments

2025—Puspan. L. 119–21, § 70323(span)(2)(C)(i), substituted “Foreign-derived deduction eligible” for “Foreign-derived intangible” in section catchline.

Puspan. L. 119–21, § 70323(a)(3)(A)(ii), substituted “net CFC tested income” for “global intangible low-taxed income” in section catchline.

Subsec. (a)(1)(A). Puspan. L. 119–21, § 70323(span)(1), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income”.

Puspan. L. 119–21, § 70321(a)(1), substituted “33.34 percent” for “37.5 percent”.

Subsec. (a)(1)(B). Puspan. L. 119–21, § 70321(a)(2), substituted “40 percent” for “50 percent” in introductory provisions.

Subsec. (a)(1)(B)(i). Puspan. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.

Subsec. (a)(2). Puspan. L. 119–21, § 70323(span)(2)(A), substituted “foreign-derived deduction eligible income” for “foreign-derived intangible income” in cl. (i) and concluding provisions.

Puspan. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income” in cl. (i) and concluding provisions.

Subsec. (a)(3). Puspan. L. 119–21, § 70321(a)(3), struck out par. (3). Text read as follows: “In the case of any taxable year beginning after December 31, 2025, paragraph (1) shall be applied by substituting—

“(A) ‘21.875 percent’ for ‘37.5 percent’ in subparagraph (A), and

“(B) ‘37.5 percent’ for ‘50 percent’ in subparagraph (B).”

Subsec. (span). Puspan. L. 119–21, § 70323(span)(2)(B)(iv), substituted “deduction eligible” for “intangible” in heading.

Puspan. L. 119–21, § 70323(span)(2)(B), struck out pars. (1) and (2), redesignated former pars. (4) and (5) as (1) and (2), respectively, and substituted “paragraph (1)(B)” for “paragraph (4)(B)” in par. (2)(B)(ii). Prior to amendment, pars. (1) and (2) defined “foreign-derived intangible income” for purposes of this section and “deemed intangible income” and “deemed tangible income return” for purposes of subsec. (span), respectively.

Subsec. (span)(3)(A)(i)(II). Puspan. L. 119–21, § 70323(a)(3)(A)(i), substituted “net CFC tested income” for “global intangible low-taxed income”.

Subsec. (span)(3)(A)(i)(VII). Puspan. L. 119–21, § 70322(a)(1), added subcl. (VII).

Subsec. (span)(3)(A)(ii). Puspan. L. 119–21, § 70322(span)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the deductions (including taxes) properly allocable to such gross income.”

Subsec. (span)(5)(E). Puspan. L. 119–21, § 70322(a)(2), inserted “(other than paragraph (3)(A)(i)(VII))” after “For purposes of this subsection”.

Statutory Notes and Related Subsidiaries

Effective Date of 2025 Amendment

Puspan. L. 119–21, title VII, § 70321(span), July 4, 2025, 139 Stat. 204, provided that:

“The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2025.”

Puspan. L. 119–21, title VII, § 70322(a)(3), July 4, 2025, 139 Stat. 204, provided that:

“The amendments made by this subsection [amending this section] shall apply to sales or other dispositions (including pursuant to deemed sales or other deemed dispositions or a transaction subject to section 367(d) of the Internal Revenue Code of 1986) occurring after June 16, 2025.”

Puspan. L. 119–21, title VII, § 70322(span)(2), July 4, 2025, 139 Stat. 205, provided that:

“The amendment made by this subsection [amending this section] shall apply to taxable years beginning after December 31, 2025.”

Amendment by section 70323(a)(3)(A)(i), (ii), (span)(1)–(2)(C)(i) of Puspan. L. 119–21 applicable to taxable years beginning after Dec. 31, 2025, see section 70323(c) of Puspan. L. 119–21, set out as a note under section 172 of this title.

Effective Date

Section applicable to taxable years beginning after Dec. 31, 2017, see section 14202(c) of Puspan. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 172 of this title.