### Question
How does Foreign Corporations define accumulated effectively connected earnings and profits?


### Answer
Under *26 U.S.C. § 884*, **accumulated effectively connected earnings and profits** is defined as:

> the excess of—


(I) the aggregate effectively connected earnings and profits for preceding taxable years beginning after December 31, 1986, over


(II) the aggregate dividend equivalent amounts determined for such preceding taxable years

#### Citation:
  - *26 U.S.C. § 884*
  - 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 II-NONRESIDENT ALIENS AND FOREIGN CORPORATIONS > Subpart B-Foreign Corporations**

