Taxation of Income Earned by Foreign Subsidiaries: The Subpart F and PFIC Regimes (Completed)

Many U.S. taxpayers erroneously think that they do not have to pay U.S. taxes on income earned by their foreign subsidiaries. There are two major exceptions to deferral of income earned by foreign subsidiaries — the Subpart F and the Passive Foreign Investment Company (PFIC) regimes. Both of these regimes constitute traps for the unwary who may unknowingly be subject to taxes and penalties for failure to comply.

Presented by Robert Misey, J.D., LL.M., M.B.A., and Benjamin Genzer, J.D., this practical two-hour CPE webinar will help you understand the tax rules and potential pitfalls presented by income earned from foreign subsidiaries. Mr. Misey will focus on the identification, taxation and reporting of Subpart F income and the role of PFICs in your or your clients' corporate structure. The presentation time will include opportunities for you to ask questions directly to Mr. Misey and Mr. Genzer.

Who Should Attend
Business tax and finance executives, directors, managers and staff; CPAs; Enrolled Agents; tax preparers and staff; accountants, attorneys and financial advisors who work with and advise businesses that have cross-border operations, activities and issues

Topics Covered

• Determination of whether a foreign corporation is a controlled foreign corporation ("CFC")
• How to structure ownership so that a foreign corporation is not a CFC
• Identification of Subpart F income for inclusion on a U.S. taxpayer's return
• Use of the exceptions to avoid including Subpart F income
• Understanding the inclusion for investment in U.S. property, including the pledge of foreign assets
• Reporting Subpart F income on Form 5471
• Determination of whether a foreign corporation is a Passive Foreign Investment Company (PFIC) - The Assets Test - The Income Test
• Understanding the two alternatives by which PFICs can be taxed - Excess Distributions - Qualified Electing Funds
• Reporting for PFICs on Form 8621

Learning Objectives

• Understand the principles surrounding the taxation of income earned by foreign subsidiaries
• Identify, exclude and report Subpart F income
• Understand how to identify and report PFIC income

Level
Intermediate

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
Basic knowledge of U.S. international income taxation

Advance Preparation
None