Controlled Foreign Corporations Tax Fundamentals

Summary

This practice note discusses the controlled foreign corporation (CFC) rules. To determine whether a corporation is a CFC, this practice note will explore the following key Subpart F concepts: definition of a U.S. shareholder, definition of a U.S. person, definition of ownership, and categories of Subpart F income and filing requirements and penalties. This practice note concludes with a discussion of Form 5471 and some planning issues for your consideration, such as the transfer pricing and the foreign tax credit implications of Subpart F income.