🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeClass Notes1,200,000US530,000

TAX 9869 Lecture Notes - Lecture 50: Passive Income, Cayman Islands, W. M. Keck Observatory

60 views4 pages
scarletsnail973
11 Aug 2020
School
Baruch College
Department
Tax
Course
TAX 9869
Professor
peter

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

All general income of cfc is called foreign based company income: foreign person holding company income. Basically passive type: div/int/rent/royalties/of this nature = subpart f income. Gr: if a cfc earns subpart f income ussh picks it up & pays tax. 5% interest = subpart f income and ussh must pay tax on 5% of interest income even tho cfc didnt make distr. Also subj to us tax (ussh must pick up inc as subpart f bc it is passive income) Need to figure out whats div if no e&p then maybe its not a div from us tax perspective then no issue w/ subpart f income. As cfc and rp has a substantial part of assets used in a tob in that country. Ex: you have fc thats a cfc that owns 100% of another fc and they are both organized in netherlands. Cfc parent and has substantial part of assets used in tob in.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

TAX 9869 Lecture 61: Foreign Base Company Income
scarletsnail973
TAX 9869 Lecture Notes - Lecture 48: Withholding Tax, Foreign Corporation, Wdiv-Tv
scarletsnail973
TAX 9869 Lecture Notes - Lecture 58: Model Treaty, Tax Treaty, Withholding Tax
scarletsnail973

Related Questions

Subpart F was created to prevent U.S. citizens and corporationsfrom deferring taxable income through the use of foreign entities.Prior to subpart F, many U.S. taxpayers achieved deferral of U.S.tax on certain kinds of movable income, such as dividends,interest, rents and royalties, by earning such income throughforeign corporations (Subpart F Overview, 2014). Subpart F operatesby treating a U.S. shareholder of a CFC as if it actually receivedits proportionate share of certain categories of the corporation’scurrent earnings and profits and the shareholder is required toreport this income currently in the United States whether or notthe CFC makes a distribution (Subpart F Overview, 2014). Transferpricing refers to the pricing of transactions between controlledentities. Under IRC 382, controlled entities should pricetransactions in the same way that uncontrolled entities would undersimilar circumstances (Overview of IRC 482, 2015). This is the“arm’s length standard”, which means that the price of the productthat a US parent company charges its CFC should be the same as itwould charge to an unrelated party for the same product undersimilar circumstances (Overview of IRC 482, 2015). I do not thinkit is fair that companies do not pay a tax on their foreignprofits. Corporations are able to hold these foreign profitsoverseas for years before bringing them back into the United Statesto avoid taxes. While the tax rates on US corporations are veryhigh, as we have discussed in other weeks, there are still manyloopholes in our tax laws that allow corporations to lower theirtaxes. I believe the corporate tax rates could be a little lowerbut even then the tax rules wouldn’t be changed. LB&IInternational Practice Service Concept Unit Subpart F Overview.(2014, September 3). Retrieved February 10, 2016, fromhttps://www.irs.gov/pub/int_practice_units/DPLCUV_2_01.PDFInternational global corporations are extremely challenging to taxand audit.

Basically, the US company's foreign subsidiaries are foreigncorporations. It's like France taxing US domestic companies, evenif their parent is in France. It just can't really be done.

Have your say!