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Subpart F Expansion After Tax Reform: Increased Tax Liability and Reporting Obligations

New Controlled Foreign Corporation and U.S. Shareholder Definitions, GILTI, Transition Tax

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, December 3, 2019

Recorded event now available

This course will provide tax advisers with a practical overview of the significant changes the 2017 tax reform law made to Subpart F tax treatment of controlled foreign corporations (CFCs). The panel will detail in plain language the specific areas where the law expanded Subpart F, including for example the new "downward" attribution rules, and discuss how these changes will create new foreign information reporting requirements on Form 5471.

Description

The changes brought about in the 2017 tax reform law continue to reverberate in the area of information reporting and tax liability attributable to foreign subsidiary assets and activities. With the new GILTI provisions and transition tax on specific offshore holdings, as well as changes to the determination of foreign subsidiaries subject to these provisions, the law expands the reach of the historic Subpart F regime, and taxpayers and advisers alike are still coming to grips with the increased planning issues and reporting duties.

The Subpart F rules require "U.S. shareholders" of CFCs to treat certain types of income as taxable in the current year. These calculations have long presented significant challenges to tax advisers serving clients with CFC holdings.

The new law adds additional complexity to an already challenging regime. The changes caused an increase in the number of foreign corporations treated as CFCs subject to reporting and tax requirements, as well as the amount of income liable to current U.S. taxation. Tax advisers must also know whether the new rules create new filing obligations to avoid severe penalties for foreign information reporting noncompliance.

Listen as our authoritative panel of international tax practitioners reviews the Subpart F rules and provides a practical guide to the specific changes the 2017 tax law makes to determining CFC ownership and reporting obligations.

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Outline

  1. Existing Subpart F framework
    1. Identify the definition of a CFC
    2. "U.S. shareholder"
    3. Income inclusions and rates
    4. Allowable exclusions
  2. Expansion of Subpart F in the new tax reform law
    1. Expanded definition of a CFC and U.S. shareholder
    2. The additional income included in the calculation base
    3. Disparate treatment between corporate shareholders and individual shareholders of CFCs
    4. Downward attribution rules
  3. Section 951A GILTI current tax
    1. Overview
    2. Key updates from regulations
    3. Proposed high tax exclusion
    4. Interaction with Section 956
  4. Identifying new Form 5471 reporting obligations

Benefits

The panel will discuss these and other important topics:

  • How the 2017 tax law's expansion of the definitions of CFCs and U.S. shareholders will create new tax and reporting obligations for U.S. taxpayers previously exempt from filing duties
  • Constructive ownership tests in CFCs after the new downward attribution rules
  • How the Subpart F changes run counter to the tax law's general aim to convert to more territorial taxation of U.S. taxpayers as opposed to global-based
  • Treatment of earnings invested in U.S. property

Faculty

Fuller, Pamela
Pamela A. Fuller, JD, LLM
Of Counsel
Royse Law Firm

Ms. Fuller advises a wide range of clients--including private and public companies, joint ventures, private equity...  |  Read More

Sams, James
James K. Sams
Principal, International Corporate Tax
KPMG

Mr. Sams is attached to the firm's International Corporate Tax Services Practice, providing high-level technical...  |  Read More