TAX 9869 Lecture Notes - Lecture 62: Tax Haven, Controlled Foreign Corporation, Passive Income

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11 Aug 2020
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Example:
Let’s say we have a foreign partnership which owns a US corporation and a foreign corp
Is the US corp a USSH of the foreign? Now there is downward attribution
I attribute the ownership the foreign pship has in the foreign corporation to US
corporation so US corp is viewed as though it owns foreign corporation 100%
So foreign corp is a CFC
Does this mean USSH has to pick up Subpart F income? No, not necessarily b/c
the US corp is NOT a direct/indirect owner through a foreign entity-only owned
through attribution because it is attributed the ownership from the foreign
partnership and since the ownership is attributed from the FP, not a
direct/indirect ownership, US corp does not have to pick up subpart F income
Look to anyone on top
Example:
US guy owns 10% of the FP and foreign corp owns 90% of the FP
This is still a CFC because more than 50% owned through attribution by this US Corp
Now made this foreign corp a CFC b/c owned through attribution by US Corp
Guy on top (US corp), is a USSH because owns 10% or more, now USSH indirectly into
foreign corp but because of change of law is a CFC, has to pick up 10% of the Subpart F
income
Pick up 10% of GILTI- this guy gets in trouble b/c no one wants to pick up Subpart F
income
Subpart F income and GILTI for an individual are subject to tax @ordinary income
rates
No benefit- qualified dividends, anything like that
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