964-l(c)(6), a foreign corporation
is not required to adopt an accounting method for purposes of computing E&P until the year in which the foreign corporation
's E&P becomes "significant" for U.
corporation is required by Internal Revenue Service regulations to submit a Form 5471 for any Controlled Foreign Corporation
(CFC) with an accounting period ending with or within the U.
In this article, we'll assume the recipient of the fees is a foreign corporation
subsidiary of a foreign corporation
is subject to net basis U.
Person With Respect to Certain Foreign Corporations
Before the 2004 Act, even if a foreign corporation
was organized in a qualified foreign jurisdiction, any dividend received from that corporation would not be treated as qualified dividend income if the corporation was a FPHC, (13) a FIC, (14) or a passive foreign investment company (PFIC), for the current year or the preceding tax year.
shareholders are not taxed on the income earned by a foreign corporation
until that corporation repatriates the income by payment to the U.
Example 3: Foreign corporation
F owns a 20% interest (capital and profits) in partnership PS with a basis of $2 million.
Four major pieces of legislation have defined and extended the concept of a controlled foreign corporation
and the mechanism by which foreign corporation
earnings are includable in the U.
Many transactions at the foreign corporation
level have no current effect on the shareholder's U.
Moreover, the company said the Alabama domestic shares tax--which foreign corporations
do not pay--did not offset the discrimination resulting from the foreign corporation
The IRS issued temporary regulations on June 7 governing whether a foreign corporation
has "substantial business activities" in the foreign country in which, or under the law of which, the corporation is created or organized, compared to the total business activities of the expanded affiliated group (T.