CPE Tax Webinar: Subpart F Income Rules and Sections 956, 958 and 1248: The Reporting Challenges of Controlled Foreign Corporations. Thursday, July 21, 2016
Event Melinda Fellner Bramwit
Foreign source income earned by a foreign corporation is generally not taxed by the U.S. until the income is distributed -- or made available on a “permanent basis” -- to the U.S. shareholder(s) or invested in U.S. property.
This deferral of U.S. taxation has been allowed from a policy standpoint on the grounds that it encourages investment in foreign countries so that U.S.-owned businesses are able to compete in foreign markets.
The objective of Subpart F is to tax U.S. shareholders currently on their pro rata share of certain types of income earned by the foreign corporation, such as passive income and income earned in tax haven countries. Under IRC §956, U.S. shareholders are required to include in gross income their pro rata share of the CFC’s increase in earnings invested in U.S. property made during the year.
Earnings and profits (E&P) are intended to be a measure of the economic earnings of the corporation available for distribution to its shareholders; however, earnings do not mean taxable earnings. IRC §312 lists the types of adjustments that must be made to taxable income in order to calculate E&P.
With this newly updated rule, to prevent taxpayers from changing the character of income from ordinary to capital gain via a stock sale, tax managers must understand and apply IRC §1248.
This webinar will provide professionals with a solid foundation on defining a controlled foreign corporation and a “U.S. shareholder,” under the rules of Subpart F. Corporate tax managers and advisers will be provided with tools to master tax reporting challenges by drilling down into recognizing the different types of Subpart F income and allowable exclusions, identifying the tax consequences of repatriating a U.S. shareholder owned foreign corporation’s earnings to the United States, and describing “earnings and profits” for these purposes.
The panel will explain different types of Subpart F income and allowed exclusions, lay out tax ramifications of bringing U.S.-owned earnings from foreign corporations to the United States, and drill down into calculating E&Ps.
- Recognize the purpose and calculations of Subpart F
- Identify the characteristics of a controlled foreign corporation
- Define a U.S. shareholder and a foreign corporation
- Apply the constructive ownership tests
- Define foreign base company income and the exclusions
- Identify earnings invested in U.S. property
- Recognize how earnings and profits are calculated
- Distinguish the changes in character of income from ordinary to capital gain via a stock sale.
Audience This webinar will be especially relevant for experienced international tax counsel and advisors throughout the U.S.
You can register for the CPE tax program Webinar here.
About the Panelist:
Melinda F. Bramwit is a Partner in Rimon's New Jersey and New York offices.
Ms. Bramwit focuses her practice on tax matters including federal, state and international tax. her experience includes business structuring, acquisitions and reorganizations, and joint ventures and partnerships in both the domestic and offshore world. This experience includes negotiating and drafting operating agreements and drafting organizational and transactional documents for corporate transactions.