26 U.S.C. § 114
Section 114 · Repealed. Pub. L. 108357, title I, 101(a), Oct. 22, 2004, 118 Stat. 1423]
Amended 1 time on record
Applied in 135 court decisions — leading case Jarecki v. G. D. Searle & Co. (1961)
Most recently applied in Dwa Holdings LLC v. United States (May 2018)
Cases citing this section usually also cite 26 U.S.C. § 23 · 26 U.S.C. § 613 · 26 U.S.C. § 113
How often courts cite this section
Court decisions citing this, by year.Markers show enactment, consequential amendments, and circuit splits over this section — watch for a citation surge after a change or a disagreement. The dip in the last several years is a data-coverage gap, not a real trend — our corpus holds fewer opinions from the most recent years, so recent citations are undercounted.
Gross income does not include extraterritorial income.
Subsection (a) shall not apply to extraterritorial income which is not qualifying foreign trade income as determined under subpart E of part III of subchapter N.
(1) In general
Any deduction of a taxpayer allocated under paragraph (2) to extraterritorial income of the taxpayer excluded from gross income under subsection (a) shall not be allowed.
(2) Allocation
Any deduction of the taxpayer properly apportioned and allocated to the extraterritorial income derived by the taxpayer from any transaction shall be allocated on a proportionate basis between—
(A) the extraterritorial income derived from such transaction which is excluded from gross income under subsection (a), and
(B) the extraterritorial income derived from such transaction which is not so excluded.
Notwithstanding any other provision of this chapter, no credit shall be allowed under this chapter for any income, war profits, and excess profits taxes paid or accrued to any foreign country or possession of the United States with respect to extraterritorial income which is excluded from gross income under subsection (a).
For purposes of this section, the term “extraterritorial income” means the gross income of the taxpayer attributable to foreign trading gross receipts (as defined in section 942) of the taxpayer.
Editorial notes U.S. Code · Office of the Law Revision Counsel
Prior Provisions
A prior section 114, act Aug. 16, 1954, ch. 736, 68A Stat. 35, related to sports programs conducted for American National Red Cross, prior to repeal by Pub. L. 101–508, title XI, §11801(a)(8), Nov. 5, 1990, 104 Stat. 1388–520.
Effective Date
Section applicable to transactions after Sept. 30, 2000, with special rules relating to existing foreign sales corporations, see section 5 of Pub. L. 106–519, set out as a note under section 941 of this title.