Application of foreign-source dividend deduction to amounts received by controlled foreign corporations

(a) In general Section 245A is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: (g) Application to certain dividends received by controlled foreign corporations from specified 10-Percent owned foreign corporations Except as otherwise provided by the Secretary in regulations or other guidance, if a controlled foreign corporation with respect to which a domestic corporation is a United States shareholder receives a dividend (other than a hybrid dividend) from a specified 10-percent owned foreign corporation with respect to which such domestic corporation is also a United States shareholder, the amount includible in the gross income of such United States shareholder under section 951(a)(1)(A) by reason of the foreign-source portion of such dividend shall be treated for purposes of this section in the same manner as if such amount were the foreign-source portion of a dividend received by such United States shareholder from such specified 10-percent owned foreign corporation.. (b) Effective date The amendments made by this section shall apply to distributions made in taxable years of foreign corporations beginning after December 31, 2025, and to taxable years of United States shareholders in which or with which such taxable years of foreign corporations end. (c) No inference Nothing in the amendments made by subsection (a) shall be construed to create any inference with respect to the treatment of dividends described in section 245A(g) of the Internal Revenue Code of 1986 (as added by subsection (a)) in taxable years beginning before the taxable year described in subsection (b).