Income earned abroad by U.S. controlled foreign corporations can often qualify for deferral of U.S. income tax. If the foreign corporation is a controlled foreign corporation (CFC), its U.S. shareholders may be taxable on such untaxed income if the corporation converts the property to U.S. property (Code §956).
The U.S. has now issued new and revised regulations relating to such investments in U.S. property. The regulations are technical, but here are some highlights:
a. Treas. Regs. §1.956-1T(b)(4) revises the anti-avoidance rule as to the definition of “funding” in regard to treating U.S. property held in a non-U.S. corporation controlled by the CFC if there is a principal purpose to avoid §956 (i.e., when U.S. property held in a controlled subsidiary foreign corporation will be attributed to the CFC under these rules).
b. Also under the anti-abuse rule, that rule was expanded in prior proposed regulations, and now in final regulations, to cover property that is held in controlled partnerships, too. The new rules also address how to compute these amounts, adopting a deemed liquidation rule but with special exceptions for property subject to special allocations.
c. The proposed regulations that applied §956 to property acquired by a CFC in certain related party factoring transactions were finalized.
TC 9792 (11/2/1)
No comments:
Post a Comment