---
kind: "section"
citation: "26 U.S.C. § 1373"
title: "26"
title_heading: "Internal Revenue Code"
number: "1373"
heading: "Foreign income"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/26/1373"
units:
  - "Subtitle A — Income Taxes"
  - "Chapter 1 — Normal Taxes and Surtaxes"
  - "Subchapter S — Tax Treatment of S Corporations and Their Shareholders"
  - "Part III — Special Rules"
---

# §1373. Foreign income

- (a) **S corporation treated as partnership, etc.** For purposes of subparts A and F of part III, and part V, of subchapter N (relating to income from sources without the [United States](/usc/26/993.md?p=g))—
  - (1) an [S corporation](/usc/26/1361.md?p=a-1) shall be treated as a [partnership](/usc/26/761.md?p=a), and
  - (2) the shareholders of such corporation shall be treated as [partners](/usc/26/761.md?p=b) of such [partnership](/usc/26/761.md?p=a).
- (b) **Recapture of overall foreign loss—** For purposes of [section 904(f)](/usc/26/904.md?p=f) (relating to recapture of overall foreign loss), the making or termination of an election to be treated as an [S corporation](/usc/26/1361.md?p=a-1) shall be treated as a [disposition](/usc/26/424.md?p=c-1) of the business.

## Source credit

(Added Pub. L. 97–354, § 2, Oct. 19, 1982, 96 Stat. 1682.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 1373, added Pub. L. 85–866, title I, § 64(a), Sept. 2, 1958, 72 Stat. 1652; amended Pub. L. 89–389, § 2(b)(3), Apr. 14, 1966, 80 Stat. 114; Pub. L. 91–172, title III, § 301(b)(10), Dec. 30, 1969, 83 Stat. 586, related to taxation of corporation undistributed taxable income to shareholders, prior to the general revision of this subchapter by section 2 of Pub. L. 97–354.

### Statutory Notes and Related Subsidiaries

### Effective Date

Section applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97–354, set out as a note under section 1361 of this title.