StacksVerified U.S. federal law reference

26 CFR §36.3121(l)(8)-1 — (l)(8)-1 Definition of foreign subsidiary.

Verified against eCFR.gov as of June 20, 2026View official text on eCFR.gov ↗
  1. (a)Prior to August 1, 1956.
    1. (1)For the period January 1, 1955 to July 31, 1956, inclusive, a foreign corporation is a foreign subsidiary of a domestic corporation, within the meaning of the regulations in this part, if—
      1. (i)More than 50 percent of the voting stock of the foreign corporation is owned by the domestic corporation; or
      2. (ii)More than 50 percent of the voting stock of the foreign corporation is owned by a second foreign corporation and more than 50 percent of the voting stock of the second foreign corporation is owned by the domestic corporation.
    2. (2)The application of subparagraph (1) of this paragraph may be illustrated by the following examples:
  2. (b)On or after August 1, 1956.
    1. (1)Beginning August 1, 1956, a foreign corporation is a foreign subsidiary of a domestic corporation, within the meaning of the regulations in this part, if—
      1. (i)Not less than 20 percent of the voting stock of the foreign corporation is owned by the domestic corporation; or
      2. (ii)More than 50 percent of the voting stock of the foreign corporation is owned by a second foreign corporation and not less than 20 percent of the voting stock of the second foreign corporation is owned by the domestic corporation.
    2. (2)The application of subparagraph (1) of this paragraph may be illustrated by the following examples:
  3. (c)Transfer of stock ownership. The transfer of the voting stock of a foreign corporation which is a foreign subsidiary of a domestic corporation within the meaning of section 3121(l)(8) will not affect the status of the foreign corporation as such a foreign subsidiary if at all times either of the percentage tests stated in section 3121(l)(8), relating to ownership of the voting stock of such foreign corporation, is met.
  4. (d)Meaning of “stock”. The term “stock”, as used in the regulations in this part, has the meaning assigned by paragraph (7) of section 7701(a). Section 7701(a)(7) provides as follows: