Tax Reform Series 46 – Other Subpart F Changes


Plain Language of Change:

  • Repeals of section 955, which required an inclusion of qualified foreign base company shipping operations.

  • Repeals foreign base company oil related income as a category of foreign base company income, i.e., subpart F income

  • Modifies the stock attribution rules of section 958(b) for determining CFC status so that certain stock of a foreign corporation owned by a foreign person is attributed to a related U.S. person for purposes of determining whether the related U.S. person is a U.S. taxpayer (i.e., providing for “downward attribution”). This provision is intended to render ineffective certain transactions that are used as a means of avoiding the subpart F provisions

  • Expands the definition of U.S. shareholder under subpart F to include any U.S. person who owns 10 percent or more of the total value of shares of all classes of stock of a foreign corporation

  • Eliminates the requirement that a corporation must be controlled for 30 days before the subpart F inclusions apply

Detailed Analysis of Other Subpart F Changes

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