United States: public comments requested regarding regulations on CFCs and Subpart F income

May 2, 2013

The US Treasury Department and the Internal Revenue Service (IRS) have issued a notice requesting comments concerning existing regulations TD 8618 (Definition of a Controlled Foreign Corporation, Foreign Base Company Income and Foreign Personal Holding Company Income of a Controlled Foreign Corporation).

The regulations are issued under section 951 and related provisions of the US Internal Revenue Code (IRC), which provide that a US shareholder of a controlled foreign corporation (CFC) is subject to current US taxation on the Subpart F income of the CFC, which consists of several categories of income.

The primary categories of Subpart F income are insurance income and foreign base company (FBC) income, which is the sum of foreign personal holding company (FPHC) income and other specified types of income, as provided in IRC sections 952, 953, and 954.

The regulations include the election and record-keeping requirements that are necessary to exclude certain high-taxed or active business income from Subpart F income or to include certain income in the appropriate category of Subpart F income.

The record-keeping and election procedures allow US shareholders and the IRS to know the amount of the CFC’s Subpart F income.

The IRS requested that comments be submitted no later than 24 June 2013. The mailing address and other contact information are given in the notice.

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