### Question
How is the term eligible controlled foreign corporation defined?


### Answer
The term **eligible controlled foreign corporation** is defined in *26 U.S.C. § 954* as the following:

> a controlled foreign corporation which—



(i) is predominantly engaged in the active conduct of a banking, financing, or similar business, and



(ii) conducts substantial activity with respect to such business

#### Citation:
  - *26 U.S.C. § 954*
  - 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**

