Legal Tax Deferral with a Controlled Foreign Corporation.. 5
U.S.-Source Income of a Foreign Corporation. 6
Description of U.S. Shareholders. 6
Description of Subpart F Income. 7
U.S. Shareholders Subject to Tax on Foreign Corp. Income. 10
Economics of Doing Business Offshore. 13
Definition of a Foreign Corporation.. 17
Benefits of a Non-Controlled Foreign Corporation.. 18
Tax Treatment of U.S. Stockholders in CFCs. 20
Definition of a Controlled Foreign Corporation.. 22
Constructive Ownership.. 24
A Summary Explanation of "Subpart F Income". 26
Investment Income of Controlled Foreign Corporations. 28
Related Party Purchases or Sales. 31
Related Party Services Income. 33
Other "Tainted Income" (Subpart F Income) 35
Exceptions to Subpart F Income. 36
Sale of Partnership by CFC Looks to the Assets of the Partnership. 37
Change in FPHC Rules Exclude Gains from Commodity Hedging. 37
Income from Active Conduct of Banking or Financing Business. 37
Reductions for Prior Year Deficits. 38
U.S.-Source Income of Foreign Corporations. 39
Branch Profits Tax. 43
CFC Earnings Invested in U.S. Property. 44
New Exclusions from U.S. Property Definition 
(IRC Sections 956(c)(2)(L) and (M)) 44
Bank Deposits in the U.S. (IRC Section 956(c)(2)(A)] 45
Shareholder Election to be Taxed As a U.S. Corporation.. 46
U.S. Corporations with Foreign Operations. 48
Qualified Dividend Income of a Controlled Foreign Corp.. 50
Expired Deduction for Dividends from Foreign Subsidiaries. 51
Foreign and U.S. Generally Accepted Accounting Principles. 52
Earnings and Profits of a Controlled Foreign Corporation.. 54
Transfer Pricing and IRC Section 482. 56
Currency Conversion Issues. 58
Special Rules for Depreciation and Other Deductions. 60
Tax Deferral of Non-CFC Income. 62
Special Rules for Passive Foreign Investment Companies. 63
Election to Treat a CFC as a Disregarded Entity. 66
Attribution and Constructive Ownership Rules for Foreign Corporation Shareholders  70
Change in Definition of Controlled Groups. 72
Tax on Appreciated Assets Exchanged for Stock of Foreign Corporation.. 73
Deemed Royalty on Intangibles Transferred to Foreign Corporations. 75
Foreign Tax Credits. 77
Other Issues Relating to the Foreign Tax Credit 79
Jobs Act Changes Affecting the Foreign Tax Credit 79
New Rules in 2005 and 2006. 82
U.S. Employees Working and Living Offshore. 83
Changes in the Foreign Housing Exclusion. 85
Using a Foreign Corporation to Pay Employee Expenses. 85
Ownership of CFC by an Exempt Entity. 86
Foreign Partnerships. 89
Estate and Gift Taxes on CFC Stock. 90
Reduction of Basis of Stock in a Passive Foreign Investment Company. 90
Changes in Gift Tax Rules for U.S. Expatriates (IRC Section 2107(a)) 90
CFC Owned by a Foreign Grantor Trust 91
Withholding on payments from U.S. Persons to Foreign Corporations. 93
Withholding Certificates. 93
Tax Treaties. 94
Foreign Corporation Engaged in a U.S. Trade of Business. 94
Fixed or Determinable Annual Periodic Income. 94
Withholding from Payments for Personal Services. 95
Exceptions to Withholding on FDAP Income. 95
Sales of U.S. Real Property. 95
Liquidation of a Controlled Foreign Corporation.. 96
Deemed Liquidations. 96
Limit on Importation of Loss from Liquidation of Foreign Subsidiary 
(IRC Section 334(b)(1)) 96
Corporate Inversion/Expatriation.. 98
New Rules to Deter Corporate Expatriation (Inversions) 
(IRC Section 7874) 98
Tax on Stock Compensation of Insiders in Expatriated Corporations 
(IRC Section 4985) 99
Some Foreign Corporation Tax Scams and Schemes. 100
Unreported Income from a Controlled Foreign Corporation. 100
Preposterous Claims. 101
Myth of the Foreign Corporation without a Shareholder 101
Transfer Gains to Foreign Corporation with Private Annuity. 103
Attempting to Avoid the CFC Rules with a Foreign Trust 105
Some Typical Questions We Receive. 106
How is Foreign Income of a Foreign Subsidiary Corporations Tax-
Free?. 106
Options on Foreign Corporation Stock?. 107
Foreign Private Equity Investments. 107
Clarification on Non-Controlled Foreign Corporation. 108
Tax on Transfer of Appreciated Asset to a Foreign Corporation. 109
Equal Ownership of Foreign Corporation by a U.S. Person and a 
Foreign Relative. 109
Information Returns for Payment to Foreign Entity. 111
Reporting Payments to Foreign Persons. 111
Foreign Corporation Owned by U.S. Corporation. 112
Corporate Expatriation. 113
Form 5471 for Controlled Foreign Corporations. 113
IBC Owned by a Panama Foundation. 114
Filing Form 5471 for Foreign Corporations. 116
Foreign Hedge Funds and LLC.. 116
U.S. Taxation of Gains on Foreign Stocks. 117
Gain On Sale of U.S. Realty by Foreign Corporation. 118
Foreign Corporation as Trustee of Foreign Trust 118
Preparation of Form 5471. 119
Entity Classification Election for an IBC.. 120
APPENDIX.. 122
IRS List of Countries with Per Se Corporations. 123
The Qualified Intermediary and Withholding Rules And Forms W-9,  W-8BEN, AND W-8IMY.. 125
Legislative Proposals. 129
IRC Sections Affecting Owners of Foreign Entities. 131
Tax Obligations for U.S. Shareholders of a Foreign Corp. 156
Internet-Based Information Resources. 163
Glossary. 167