Outbound transfers under the current Section 367(a) temporary regulations - a road map

Article Abstract:

The IRC Section 367(a) temporary regulations on outbound transfers to foreign corporations allow taxation of such transfers. The law allows gain on appreciated property to be taxed despite the transfer. The rules effectively block tax nonrecognition treatment unless the transaction qualifies for the gain recognition agreement or active foreign business exceptions. Transfers subject to these rules, including transfers of tangible assets or stock, are discussed, along with the exception overriding provisions and the Section 6038B reporting requirements.

Regulation of Multi-Nationals, International aspects, Capital gains tax, Recognition of gain or loss (Taxation), Recognized gain or loss (Taxation), Tax-free exchanges, International trade regulation

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The passive foreign investment company provisions: the workings of Section 1291

Article Abstract:

US shareholders in passive foreign investment companies, or PFICs, may want to avoid the excess distribution regime imposed by IRC Section 1291, choosing to make a qualified electing fund (QEF) election instead. A QEF election provides a different tax regime based on current inclusion of income, although an unpedigreed QEF potentially carries heavy tax consequences as well. Since the PFIC rules can be burdensome to controlled foreign corporations (CFCs), 1995 legislation was introduced to exempt some CFC shareholders from the rules.

Foreign Investment Regulations, Foreign corporations, Foreign investment laws, Tax elections

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The slow crawl toward eliminating deferral under Subpart F

Article Abstract:

Subpart F taxation of US shareholders of controlled foreign corporations (CFCs) has been enhanced by Section 956A, which focuses on passive income-producing assets. Although Section 956A is intended to spur the repatriation of US companies' foreign subsidiary assets, the statute's 25% passive assets test instead could lead to increased CFC activity. The section also adds complexity for both the IRS and taxpayers, while accomplishing little as an anti-deferral mechanism.

Multinational Corporations

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