### Question
How is the "controlled foreign corporation" defined?


### Answer
The term **controlled foreign corporation** is defined in *26 U.S.C. § 957* as follows -

> any foreign corporation if more than 50 percent of—


(1) the total combined voting power of all classes of stock of such corporation entitled to vote, or


(2) the total value of the stock of such corporation,


  

is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation

#### Citation:
  - *26 U.S.C. § 957*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter N-Tax Based on Income From Sources Within or Without the United States > PART III-INCOME FROM SOURCES WITHOUT THE UNITED STATES > Subpart F-Controlled Foreign Corporations**

