### Question
What does foreign investment company mean?


### Answer
**Foreign investment company** has the following meaning in *26 U.S.C. § 1246*:

> any foreign corporation which, for any taxable year beginning after December 31, 1962, is—


(1) registered under the Investment Company Act of 1940, as amended (15 U.S.C. 80a–1 to 80b–2), either as a management company or as a unit investment trust, or


(2) engaged (or holding itself out as being engaged) primarily in the business of investing, reinvesting, or trading in—


(A) securities (as defined in section 2(a)(36) of the Investment Company Act of 1940, as amended),


(B) commodities, or


(C) any interest (including a futures or forward contract or option) in property described in subparagraph (A) or (B),


  

at a time when 50 percent or more of the total combined voting power of all classes of stock entitled to vote, or the total value of all classes of stock, was held directly (or indirectly through applying paragraphs (2) and (3) of section 958(a) and paragraph (4) of section 318(a)) by United States persons (as defined in section 7701(a)(30))

#### Citation:
  - *26 U.S.C. § 1246*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter P-Capital Gains and Losses > PART IV-SPECIAL RULES FOR DETERMINING CAPITAL GAINS AND LOSSES**

