26 U.S.C. § 78

Gross up for deemed paid foreign tax credit

“The amendments made by this section [enacting this section and amending sections 535, 545, 861, 901, and 902 of this title] shall apply—

If a domestic corporation chooses to have the benefits of subpart A of part III of subchapter N (relating to foreign tax credit) for any taxable year, an amount equal to the taxes deemed to be paid by such corporation under subsections (a) and (d) of section 960 (determined without regard to the phrase “90 percent of” in subsection (d)(1) thereof) for such taxable year shall be treated for purposes of this title (other than sections 245 and 245A) as a dividend received by such domestic corporation from the foreign corporation.

For purposes of paragraph (2), a distribution made by a foreign corporation out of its profits which are attributable to a distribution received from a foreign subsidiary to which [former] section 902(b) applies shall be treated as made out of the accumulated profits of a foreign corporation for a taxable year beginning before January 1, 1963 , to the extent that such distribution was paid out of the accumulated profits of such foreign subsidiary for a taxable year beginning before January 1, 1963 .”

(Added Pub. L. 87–834, § 9(b) , Oct. 16, 1962 , 76 Stat. 1001 ; amended Pub. L. 94–455, title X, § 1033(b)(1) , Oct. 4, 1976 , 90 Stat. 1628 ; Pub. L. 115–97, title I, § 14301(c)(1) , Dec. 22, 2017 , 131 Stat. 2222 ; Pub. L. 119–21, title VII, § 70312(a)(2) , July 4, 2025 , 139 Stat. 203 .)