Internal Revenue Service
Revenue Ruling

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 Rev. Rul. 71-14

1971-1 C.B. 218

Sec. 951

Sec. 956

IRS Headnote

State obligations held by a controlled foreign corporation are not to be taken into account in determining a United States shareholder's pro rata share of the corporation's increase in earnings invested in United States property.

Full Text

Rev. Rul. 71-14

A controlled foreign corporation, as defined in section 957(a) of the Internal Revenue Code of 1954, has investments in obligations of one of the states of the United States. Held, the State obligations held by the controlled foreign corporation do not fall within any of the categories of United States property specifically enumerated in section 956(b)(1) of the Code and, therefore, are not to be taken into account in determining the United States shareholder's pro rata share of the corporation's increase in earnings invested in United States property for any taxable year pursuant to section 951(a)(1)(B) of the Code.