Foreign Railroad Rolling Stock Exemption

§ 883. Exclusions from gross income(a) Income of foreign corporations from ships and aircraftThe following items shall not be included in gross income of a foreign corporation, and shall be exempt from taxation under this subtitle:(1) Ships operated by certain foreign corporationsGross income derived by a corporation organized in a foreign country from the international operation of a ship or ships if such foreign country grants an equivalent exemption to corporations organized in the United States. (2) Aircraft operated by certain foreign corporationsGross income derived by a corporation organized in a foreign country from the international operation of aircraft if such foreign country grants an equivalent exemption to corporations organized in the United States. (3) Railroad rolling stock of foreign corporationsEarnings derived from payments by a common carrier for the use on a temporary basis (not expected to exceed a total of 90 days in any taxable year) of railroad rolling stock owned by a corporation of a foreign country which grants an equivalent exemption to corporations organized in the United States. (4) Special rulesThe rules of paragraphs (6), (7), and (8) of section 872(b) shall apply for purposes of this subsection. (5) Special rule for countries which tax on residence basisFor purposes of this subsection, there shall not be taken into account any failure of a foreign country to grant an exemption to a corporation organized in the United States if such corporation is subject to tax by such foreign country on a residence basis pursuant to provisions of foreign law which meets such standards (if any) as the Secretary may prescribe. (b) Earnings derived from communications satellite systemThe earnings derived from the ownership or operation of a communications satellite system by a foreign entity designated by a foreign government to participate in such ownership or operation shall be exempt from taxation under this subtitle, if the United States, through its designated entity, participates in such system pursuant to the Communications Satellite Act of 1962 (47 U.S.C. 701 and following). (c) Treatment of certain foreign corporations(1) In generalParagraph (1) or (2) of subsection (a) (as the case may be) shall not apply to any foreign corporation if 50 percent or more of the value of the stock of such corporation is owned by individuals who are not residents of such foreign country or another foreign country meeting the requirements of such paragraph. (2) Treatment of controlled foreign corporationsParagraph (1) shall not apply to any foreign corporation which is a controlled foreign corporation (as defined in section 957(a)).