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 CorporationsBefore 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 franchise tax.
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.
