Foreign Subsidiaries

Topics

August 1, 2012

When Becoming a U.S. Resident, Beware of PFIC Rules

As the workforce becomes more mobile, many non-U.S. citizens who become U.S. residents for work reasons have to deal with not only cultural adjustments but also the unanticipated workings of the PFIC tax regime.

July 1, 2012

Interaction of the Subpart F Dual-Character Property and Majority-Use Rules

When a controlled foreign corporation (CFC) sells property used in its active business, any gain generally is not treated as subpart F income includible in its U.S. shareholders’ taxable income.

July 1, 2012

Potential Pitfalls in PFIC Reporting

PFIC investors should be aware of new PFIC reporting requirements and should be alert to developments that may affect them.

July 1, 2012

Temp. Regs. Issued on Obligations Arising From Certain Upfront Payments by CFCs

The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts for U.S. federal income tax purposes.

May 11, 2012

Obligations Arising From Certain Upfront Payments Made by CFCs Are Not U.S. Property

The IRS issued temporary regulations relating to the treatment of upfront payments made pursuant to certain notional principal contracts for federal income tax purposes.

April 1, 2012

Potential Pitfall Associated with Reorganizations Involving Chinese Subsidiaries

When a U.S. company wants to reorganize a worldwide structure that includes Chinese entities, tax issues should be carefully considered to avoid any unforeseen Chinese tax liability.

October 1, 2011

Passive Foreign Investment Companies

This item assesses various planning alternatives that may help U.S. taxpayers avoid the negative aspects of the PFIC regime, including qualifying electing funds, mark-to-market elections, and various planning strategy options.

July 1, 2011

Application of CFC Lookthrough Rule to Payments Made by a Partnership to Its CFC Partner

This item examines the controlled foreign corporation (CFC) lookthrough rule.

June 21, 2011

IRS Suspends Foreign Asset, Passive Foreign Investment Company Information Reporting Rules

The IRS announced that it is suspending the information reporting requirements for certain individuals with foreign assets and shareholders of passive foreign investment companies (PFICs) under Secs. 6038D and 1298(f) (Notice 2011-55)

June 9, 2011

IRS Eliminates Form 5472 Duplicate Filing Requirement

The IRS issued temporary and proposed regulations to remove the duplicate filing requirement for Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.

July 1, 2010

Application of Sec. 1297(d) Overlap Rule to PFIC Shares Held by a U.S. Partnership

Letter Ruling 200943004 provides helpful insight into IRS thinking with respect to the application of the PFIC/CFC overlap rule in the partnership context.

July 1, 2009

Effect of Debt Recharacterization on Worthless Securities Deductions

The IRS recently addressed concerns that the recharacterization of intercompany debt as common equity might prevent a worthless securities deduction.

February 1, 2009

Tips for Preparing the Form 5471 for Controlled Foreign Corporations

This article gives an overview of the issues faced by practitioners when preparing Form 5471 and can serve as a roadmap to the potential problems and traps for the unwary.

December 1, 2008

IRS Provides Liquidity Assistance, Relief

In response to the liquidity crisis, the IRS temporarily expanded the short-term financing exception to Sec. 956, which will permit corporations to access cash from their controlled foreign corporations (CFCs) without having an income inclusion for U.S. tax purposes.

September 1, 2007

Individuals’ Use of Offshore Holding Companies (Part II)

This article explores the tax consequences of using an offshore company to make more significant investments in foreign businesses, including situations in which the use of an offshore holding company may be consistent with bona fide U.S. federal income tax planning objectives.

August 1, 2007

Individuals’ Use of Offshore Holding Companies (Part I)

This article provides an overview of the controlled foreign corporation anti-deferral regime as it relates to “portfolio-type investments” through a foreign holding company structure and the statutory deterrents to using such a structure.