Tag Archives: Subpart F

Creating Non-Taxed “Previously Taxed Income”: The Ultimate Pre-Immigration Strategy

According to recent statistics, immigrants and their U.S.-born children now number approximately 84.3 million people, or 27% of the overall U.S. population.   The countries from which the largest numbers of these individuals originate include India, China, Mexico, and Canada.  Many of those moving to the United States are wealthy business owners who will continue to … Continue Reading

Is a Distribution of Previously Taxed Income “Exempt from Tax”?

A U.S. shareholder of a controlled foreign corporation (CFC) is required to include in its gross income its pro rata share of the CFC’s subpart F income and/or the amount determined under Section 956 with respect to such shareholder, regardless of whether any actual distributions are made to such shareholder. Because this income was taxed … Continue Reading

IRS Disregards Own Revenue Ruling in Barnes Decision

The Court of Appeals for the Second Circuit recently affirmed the Tax Court’s 2013 decision in Barnes Group, Inc. and Subsidiaries, T.C. Memo 2013-109, in which the Tax Court applied the step transaction doctrine to recharacterize a series of transactions employed by the taxpayer, a U.S. corporation, as part of its reinvestment plan.  The result … Continue Reading

Death of the “Double Irish Dutch Sandwich”? Not so Fast.

On October 14, 2014, the Irish Minister for Finance released proposals as part of the 2015 Irish Budget that would cause Irish incorporated non-resident (“INR”) companies to be treated as tax resident in Ireland beginning January 1, 2015. The goal is to shut down the use of so-called “Double Irish” and “Double Irish Dutch Sandwich” … Continue Reading

Affirmative Use of U.S. Partnerships in Inbound Tax Planning

A “U.S. shareholder” of a controlled foreign corporation (CFC) is required to include in its gross income its pro rata share of a CFC’s “subpart F” income, regardless of whether such income is distributed.  In general, a CFC is a foreign corporation that is more than 50 percent owned (directly, indirectly or constructively) by “U.S. … Continue Reading

Retroactive Tax Planning

Converting Subpart F Income into Qualified Dividends U.S. shareholders of foreign corporations are generally not subject to tax on the earnings of such corporations until the earnings are repatriated to the shareholders in the form of a dividend.  Moreover, when a foreign corporation is resident in a jurisdiction with which the United States has a … Continue Reading

The High-Tax Exception and Malta’s Refund System

A Match Made in Heaven U.S. shareholders of foreign corporations are generally not subject to U.S. federal income tax on the earnings of such corporations until those earnings are repatriated to the shareholders in the form of a dividend.  Where a foreign corporation is classified as a “controlled foreign corporation” (“CFC”), however, its “United States … Continue Reading
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