Possessions Corporation refers to a U.S. corporation, the subsidiary of another U.S. corporation, which for tax purposes is treated as if it were a foreign corporation.
To qualify as a possessions corporation, a corporation must satisfy the following requirements:
- It is a domestic U.S. corporation.
- At least 80% of its gross income is derived from within a U.S. possession.
- At least 75% of its gross income is derived from the active conduct of a trade or business in a U.S possession.