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

  • Accountant
  • AFSP
  • CRTP
  • CPA (US)
  • EA
  • ORTP
  • MRTP
  • CFIRS
  • CWS

Published: December, 2021

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  • Course Description
  • Course Qualification
  • Presenter
  • FAQ

Course Description

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)


Note:- William Seegar moved on from this world. With sadness in our hearts, we find solace in knowing that he’s in a better place. This is a recorded webinar of his live webinar. For any queries please contact us at support@my-cpe.com

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

Recommended For

  • This IRS Approved CE course is recommended for CPAs, EAs, Tax preparers and Staff, Business Tax and Finance Executives, Directors, Managers and Staff, Accountants, Attorneys and Financial Advisors who work with and advise businesses that have cross-border operations, activities and issues.

Who Should Attend?

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

Course Qualification

Webinar Qualifies For

  • 1 CE Credit of Federal tax-related matters for Enrolled Agents (EA) (Approval No. GEHNZ-T-00718-21-S)
  • 1 CPE Credit of Taxes for Certified Public Accountants (CPA-US)
  • 1 CE Credit of Federal tax-related matters for California Registered Tax Preparers (CRTP) (Approval No. 6273-CE-0673)
  • 1 CE Credit of Federal tax-related matters for Annual Filing Season Program (AFSP)
  • 1 CE Credit of Federal tax-related matters for Oregon Registered Tax Preparers (ORTP) (Approval No. GEHNZ-T-00718-21-S)
  • 1 CE Credit of Federal tax-related matters for Maryland Tax Preparer (MRTP) (Approval No. GEHNZ-T-00718-21-S)
  • 1 CE Credit for Certified Fiduciary & Investment Risk Specialist (CFIRS)
  • 1 CE Credit for Certified Wealth Strategist (CWS)
  • 1 General Credit for Accountant/Bookeeper

Additional details

  • Course Level :
    Basic
  • Credits :
    1
  • Instructional Method :
    QAS Self Study
  • Pre-requisites :
    None
  • Advance Preparation :
    None

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MY-CPE LLC, 1600 Highway 6 south, suite 250, sugar land, TX, 77478

MY-CPE LLC (Sponsor Id#: GEHNZ) has entered into an agreement with the Internal Revenue Service, to meet the requirements of 31 Code of Federal Regulations, section 10.6(g), covering maintenance of attendance records, retention of program outlines, qualifications of instructors, and length of class hours. This agreement does not constitute an endorsement by the IRS as to the quality of the program or its contribution to the professional competence of the enrolled individual. Credit earned by attendees with a PTIN will be reported directly to the IRS as required of all providers. To ensure your CPE hours are reported, update your profile in My Account to include your PTIN number. Please note: IRS CE is only mandatory for EAs and ERPAs. For all other tax return preparers, CE is voluntary.

NASBA APPROVED

MY-CPE LLC, 1600 Highway 6 south, suite 250, sugar land, TX, 77478

MY-CPE LLC (Sponsor Id#: 143597) is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its website: www.NASBARegistry.org.

CTEC APPROVED

MY-CPE LLC, 1600 Highway 6 south, suite 250, sugar land, TX, 77478

MY-CPE LLC (Sponsor ID# : 6273) has been approved by the California Tax Education Council to offer continuing education courses that count as credit towards the annual “continuing education” requirement imposed by the State of California for CTEC Registered Tax Preparers. A listing of additional requirements to register as a tax preparer may be obtained by contacting CTEC at P.O. Box 2890, Sacramento, CA, 95812-2890, toll-free by phone at (877) 850-2832, or on the Internet at www.ctec.org.

Presenter

About Presenter

William Seeger

President, QuantEcon Consulting

Dr. Seeger is currently a Clinical Professor of Economics at the University of Texas at Arlington, College of Business Administration, and President of Quantecon Consulting, an Economic consulting firm.  The focus of his academic research is Transfer Pricing and International Tax issues. Upon his retirement in October 2014, Dr. Seeger was a Principal in KPMG’s Global Transfer Pricing Services practice. He was practice leader, Economic and Valuation Services, for the Dallas, Houston and Denver Business Units and a senior economist and Southwest area lead for KPMG’s Economic Consulting Practice. Dr. Seeger has twenty years of experience in public accounting and three years’ experience with the Internal Revenue Service as an Industry Economist in the Comprehensive Examination Program. 

In his public accounting career, Dr Seeger specialized in economic and tax issues related to tax efficient structuring of the operations of multinational organizations. He has advised clients on the Transfer Pricing economics related to intercompany financing, deferral, intangible planning, services, shared cost allocations, and operational price setting. While at KPMG, Dr. Seeger led Transfer Pricing teams as part of KPMG's financial statement audits of clients related to Fin 48 matters, assisted in Transfer Pricing Dispute Resolution, helped clients with negotiating and establishing their Advance Pricing Agreements, worked with KPMG's Mergers and Acquisitions teams on Transfer Pricing exposures of potential target acquisitions, and served as part of KPMG's Quality review team finalizing TP reports for release to clients.

As the market leader for KPMG in the Dallas/Denver Business unit, Dr. Seeger had oversight in the areas of Oil and Gas, Engineering and Construction, Consumer and Industrial Business, and Financial Services. He was the Southwest area practice leader for Transfer Pricing services and Economic Consulting Services, the Global market leader for Energy and Natural Resources in the areas of oil and gas, chemicals, utilities, engineering and construction, and mining and forestry, and the National Transfer Pricing leader for the Engineering, Construction, and Procurement industry market segment.

Dr. Seeger has a PhD and MA in Political Economy from the University of Texas at Dallas, with specializations in Industrial Regulation and Econometrics, and a BA in Economics from the University of Notre Dame, with a concentration in Quantitative Economics. He is currently a candidate for a Master’s degree in Jurisprudence in International Taxation from the Texas A&M University Law School.  

About Company

QuantEcon Consulting

quanteconconsulting.com/

Economic Consulting Services including Transfer Pricing / Dispute Resolution / International Trade / Policy & Taxation / Forensic Investigation / Public Speaking for mid to large size businesses.

We are a team of diverse professionals who recognize that success in business depends upon a multidisciplinary approach to problems. Problems and their solutions are never one dimensional;  as such our diverse skills provide a unique platform upon which all facets of a challenging problem can be assessed and solutions discerned and derived. 

The first thing we'll do for you is listen. We need to understand your perspective and point of view on the challenges you face. Second, we become experts on your business model and your position in the marketplace. Thirdly, we provide value by providing the right solution that comports with your facts and unique circumstances. Finally, we don't fold up our consulting tent and walk away; instead we partner with you on the implementation of our proposed solution.

Faq

FAQs content

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