[Code of Federal Regulations]
[Title 26, Volume 9]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.854-3]

[Page 46-47]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.854-3  Definitions.

    (a) For the purpose of computing the limitation prescribed by 
section 854(b)(1)(B) and paragraph (c) of Sec. 1.854-1, the term ``gross 
income'' does not include gain from the sale or other disposition of 
stock or securities. However, capital gains arising from the sale or 
other disposition of capital assets, other than stock or securities, 
shall not be excluded from gross income for this purpose.
    (b) The term ``aggregate dividends received'' includes only 
dividends received from domestic corporations other than dividends 
described in section 116(b) (relating to dividends not eligible for 
exclusion from gross income). Accordingly, dividends received from 
foreign corporations will not be included in the computation of 
``aggregate dividends received''. In determining the amount of any 
dividend for

[[Page 47]]

purposes of this section, the rules provided in section 116(c) (relating 
to certain distributions) shall apply.