IRS inversion guidance introduces new restrictions on corporate inversions and post-inversion restructuring transactions.
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Foreign Subsidiaries
IRS Holds Its Ground in Substantial Business Activity Regulations
Despite IRS moves to curb corporate inversions, some multinational corporations still search for low-tax jurisdictions.
Foreign Corporation Earnings and Profits: Common Misconceptions and Pitfalls
This item provides an overview of E&P of foreign corporations and several common misconceptions that directly affect E&P.
Recently Issued Regulations Will Increase Likelihood of Sec. 956 and Subpart F Income Inclusions
The regulations limit the application of the “active rents and royalties” exception to foreign
personal holding company income, expanding the instances in which a controlled foreign corporation will be treated as holding U.S. property.
Regulations Prevent CFCs From Using Partnerships to Avoid Sec. 956
The IRS issued temporary and proposed regulations governing the treatment of property held by a controlled foreign corporation in connection with certain transactions involving partnerships.
Basis Adjustments in CFC Stock Held by Partnerships for Subpart F Inclusions, PTI Distributions
Application of PTI rules to partnerships can be tricky, in part because domestic partnerships are treated as U.S. persons, but foreign partnerships are not. Therefore, a domestic partnership can be a U.S. shareholder of a CFC and entitled to a Sec. 961(a) basis adjustment for the CFC stock it owns, but a foreign partnership, even if owned by U.S. persons, is not so entitled.
IRS Proposes to Define Active Conduct of a Trade or Business Under PFIC Rules
Proposed regulations would clarify the circumstances under which investment income a foreign insurance company earned is derived in the active conduct of an insurance business for determining whether the income is passive income, and thus the extent to which the company’s assets are treated as passive assets in determining whether the company is a passive foreign investment company.
Proposed PFIC Rules Would Define “Active Conduct” of an Insurance Business
Proposed regulations would clarify the circumstances under which investment income earned by a foreign insurance company is derived in the active conduct of an insurance business for purposes of determining whether the income is passive income.
Selling Partnerships That Own CFCs: A Potential Trap for the Unwary
Should gain recognized on a sale of a partnership that owns CFC stock be treated as capital gain or ordinary income?
IRS Allows Sec. 1298(f) Filing Exemption for Certain Holders of Marked-to-Market PFIC Stock
The IRS announced that it will amend the Sec. 1298(f) regulations to create an exception from its filing requirements for U.S. persons holding passive foreign investment company (PFIC) stock that is marked to market under Sec. 475 or another Code section other than Sec. 1296.
Navigating the Net Investment Income Tax: Key Issues for Investment Funds and Their Partners
This item summarizes the aspects of the net investment income tax that are most relevant to hedge fund investors and general partners.
PFIC Reporting Rules Do Not Apply to Certain Marked-to-Market Stock
The IRS announced that it will amend the regulations governing the reporting requirements for U.S. persons who hold stock in passive foreign investment companies.
Form 5472 Filing Requirements to Become More Stringent
The IRS issued final and proposed regulations amending the rules for filing Form 5472.
Sec. 956 and Subpart F Inclusions, Actual Distributions, and Previously Taxed Income
Previously taxed income rules were designed to prevent double taxation of a controlled foreign corporation’s earnings. Keeping track of a foreign corporation’s earings and profits under the rules can be complicated.
Regs. Tighten Form 5472 Filing Requirements
The IRS is amending the rules for filing Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
A 21st Century PFIC Regime: Must All Working Capital Be Passive?
Draconian penalties of the PFIC rules may risk pushing U.S. investors toward missing the proverbial “information age” boat.
Foreign Corporations: Procedures and Pitfalls in Adopting and Changing Methods of Accounting for Purposes of Determining E&P
This item provides a high-level discussion of the general timing for certain foreign corporations’ adoption of methods of accounting for purposes of determining E&P, the procedural rules regarding how such foreign corporations change their method of accounting, and the importance of understanding when and how a method is adopted in light of the increased limitations such foreign corporations may face in changing methods.
CFC’s Software Leasing Income Determined to Be Foreign Personal Holding Company Income
The IRS addressed whether rental income from software leasing to third parties outside the country of a controlled foreign corporation is foreign personal holding company income.
Potential U.S. Tax Consequences of Using Foreign Sales or Manufacturing Branches
The IRS late last year released final regulations on the rules for foreign base company sales income (FBCSI) under Sec. 954(a)(2) and Regs. Sec. 1.954-3(b).
QEF Elections Under PFIC Rules
In enacting the PFIC rules in 1986, Congress created a complex and punitive tax regime for certain passive foreign investments that continues to plague U.S. taxpayers and their tax advisers.
TAX PRACTICE MANAGEMENT
2025 tax software survey
AICPA members in tax practice assess how their return preparation software performed during tax season and offer insights into their procedures.
