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Anti-deferral regimes: Subpart F, PFIC, and GILTI After TCJA

Anti-deferral regimes CPE/CE Course

1 Credit

$10

Subject Area

Taxes

Webinar Qualifies For

1 CPE credit of Taxes for all CPAs

1 CE credit of Federal Tax for Enrolled Agents ( IRS Approved : GEHNZ ) (Approval No. GEHNZ-T-00718-21-S)

1 CE credit of Federal Tax Subjects for California Tax Professionals (CTEC Approved - 6273) (Approval No. 6273-CE-0673)

1 CE credit of Annual Filing Season program (AFSP)( IRS Approved : GEHNZ )

1 CPE credit for Certified Management Accountants (CMA)

1 CE credit of Federal Tax for Oregon Tax Preparers (Approval No. GEHNZ-T-00718-21-S)

1 CE credit of Federal Tax for Maryland Tax Preparers (Approval No. GEHNZ-T-00718-21-S)

1 General Educational credit for Tax Professionals / Bookkeepers / Accountants

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Before starting this self study program, please go through the instructional document.

Overview

  • Taxation of foreign source income flowchart
    5 mins
  • Active (Third-Party) Trade or business exception
    16 mins
  • Foreign base company sales income
    19 mins
  • Global intangible low-taxed income
    29 mins
  • Background: What's the issue?
    42 mins

Course Description

U.S. taxpayers may believe they have no obligation for payment of U.S. taxes on income earned on their foreign investments:  CFC and non-CFC.  Unfortunately, U.S. anti-deferral regimes prevent deferral of income earned on foreign investments including US foreign subsidiaries.  Further, some taxpayers conclude that unless the investment is considered a Controlled Foreign Corporation (“CFC) there is no Passive Foreign Investment Company (“PFIC”) exposure. This conclusion is false and confuses PFIC with Subpart F.

Anti-deferral regimes will trap those heedless of their implications and consequences especially regarding PFICs.  U.S. taxpayers may unwittingly subject themselves to taxes and penalties for failure to comply with the appropriate rules. 

The Internal Revenue Code contains three principal anti-deferral regimes that impose tax on a U.S. taxpayer on a current basis as its foreign subsidiaries generate income. 

The three regimes are the: 

  • Controlled Foreign Corporation (“CFC.”) regime under Code §§951-964, also known as the “Subpart F” provisions;  
  • Passive Foreign Investment Company (“PFIC.”) regime under Code §§1291-1298; and  
  • Global Intangible Low-Taxed Income (“GILTI”) regime under USC §951A. 

This CPE/CE Webinar focuses on the identification, taxation and reporting of Subpart F and GILTI income and the role of PFICs in a corporate structure and covers the following major topics:

  • 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 
  • Definition of a PFIC  
  • Range of PFIC Investments  
  • The taxation electives of a PFIC investment 
  • 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 
  • The four-step GILTI computation 
  • Net CFC Tested Income under Section 951A(c)  
  • Net Deemed Tangible Income Return under Section 951A(b)

Learning Objectives

  • To recognize why Congress created anti-deferral regimes 
  • To recognize the principles surrounding the taxation of income earned by foreign subsidiaries 
  • To describe important changes to deferral regimes related to TCJA  
  • To identify, exclude, and report Subpart F income 
  • To differentiate examples of controlled foreign corporation (CFC) 
  • To identify the type of income related to a Foreign personal holding company income 
  • To identify the requirements to be completed when a taxpayer has Subpart F income 
  • To identify when a taxpayer has an inclusion of income under Subpart F  
  • To differentiate when a U.S. shareholder can exclude Subpart F income 
  • To explain the PFIC rules contained within IRC §§1291, 1297, 1298 and related authority 
  • To identify and report PFIC income 
  • To differentiate PFIC distributions from being taxed as excess distributions 
  • To recognize the definition of a U.S. shareholder of a CFC 
  • To differentiate characteristics when determining whether a corporation is a PFIC 
  • To discuss PFIC taxation and the reason a QEF has to be elected 
  •  To recognize when the marked to market election is used 
  • To determine the interest on deferral approach regarding PFIC taxation 
  • To describe the “Once a PFIC, always a PFIC” rule and the accompanying “lookback” rule 
  • To discuss GILTI represents recognition of the amount of offshore income deemed in excess of a specified return 
  • To determine the relationship between the specified GILTI return and Qualified Business Asset Investment (“QBAI”) 
  • To discuss when Section 250 allows a US corporation a deduction for a portion of its GILTI inclusion

Who Should Attend?

  • California Registered Tax Professional
  • Certified Management Accountant
  • Certified Public Accountant
  • CPA (Industry)
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • Maryland Tax Preparers
  • Oregon Tax Preparers
  • Tax Professionals
  • Young CPA