TAX 9869 Lecture Notes - Lecture 66: Fiction Collective Two
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Stock Attribution
Stock attribution rules apply to determine the 10% shareholder and CFC status
Three rules:
1. direct ownership
2. indirect ownership
3. constructive ownership
1) First determine who owns the stock directly
2) The indirect ownership rule is basically a look through rule
Shareholders, partners, and beneficiaries will be deemed to own their proportionate
share of a foreign corporation that is owned by a corporation partnership trust or estate
For indirect ownership we need to look at foreign entities to see who the US owners are
Constructive ownership - S318 and there are spec. Modifs in CFC + USSH rules that perhaps
changed aspects of S318
Example: US Corporation owns 20% of foreign corporation FC1 which in turn owns 50%
percent of foreign corporation FC2. DC is deemed to own 10% of FC2 (20% of 50%.)
Example of Direct Ownership: US Corporation owns of foreign corporation (directly)
Example of Multiple Direct Owners: