By Kimberly S. Blanchard, Esq.
Weil, Gotshal & Manges LLP, New York, NY
Section 892 provides an exemption from U.S. income tax for income realized by a foreign government from stocks and securities. However, the exemption does not extend to income derived by or from a "controlled commercial entity" (a "CCE") or from the disposition of an interest in a CCE.1 A CCE is an entity engaged in commercial activities anywhere in the world, if the foreign government holds, directly or indirectly: (1) 50% or more of the total interests in such entity by vote or by value; or (2) "any other interest in such entity which provides the foreign government with effective control of such entity."2