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Subpart F, CFCS, GILTI, And PFICS

  • Accountant
  • AFSP
  • CRTP
  • CPA (US)
  • EA
  • ORTP
  • Maryland Tax Preparer
  • CFIRS
  • CWS

Published: July, 2021

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  • Course Description
  • Course Qualification
  • Presenter
  • FAQ

Course Description

Overview

  • What We'll Cover
    1 mins
  • Overall Purpose of Subpart F
    10 mins
  • Definition of a CFC
    24 mins
  • Exceptions for Foreign Personal Holding Company Income
    37 mins
  • Global Intangible Low-Taxed Income (GILTI)
    59 mins
  • The Asset Test
    81 mins

Course Description

Subpart F has been the backbone of United States international tax law since its enactment in 1962 and remains so today even after the changes provided by the Tax Cuts and Jobs Act.  Subpart F was originally designed to combat deferral and the movement of operations abroad to low-tax and zero-tax jurisdictions.  Subpart F, the CFC rules, GILTI, and PFICs are all responses to the challenges posed by globalization and the free movement of capital.  Planning around and legally avoiding Subpart F income inclusions is a fundamental part of international tax planning for any United States corporation with significant international subsidiaries and operations.

This online IRS approved CE course will also discuss how the core provisions of Subpart F govern the taxation of Controlled Foreign Corporations (CFCs).  Controlled Foreign Corporations are foreign corporations (corporations incorporated outside of the United States) that are owned more than 50% (by vote or value) by U.S. shareholders (U.S. persons who own 10% or more of the corporation’s stock).  Subpart F provides special rules in the form of the Foreign Base Company Income provisions that tax income earned by the CFC where the CFC appears to be more of an economic and business intermediary rather than a substantial participant.

As a part of the Tax Cuts and Jobs Act of 2017, Congress enacted a new tax on Global Intangible Low Taxed Income (GILTI).  GILTI operates as a residual backstop for the taxation of CFCs.  GILTI applies to active income of CFCs that is not subject to Subpart F but is deemed to be in excess of a “normal” return on tangible assets.  It is not just about intangible assets and a taxpayer can have relatively few intangible assets and still be subject to GILTI.  Unlike the CFC rules, GILTI is earned by U.S. shareholders and not by the CFC itself and the inclusion rules account for all CFCs owned by a U.S. shareholder and also differ depending upon whether the U.S. shareholder is an individual or a corporation.

The rules regarding Passive Foreign Investment Companies (PFICs) were designed to target “incorporated pocketbooks” of wealthy Americans.  The PFIC rules govern the ownership by any American of interests in a foreign corporation for which 75% or more of its gross income is passive income or 50% or more of its assets are held for the production of passive income.

Key topics covered in this online CPE/CE webinar:

  • Defining U.S. shareholder for purposes of the CFC rules
  • Defining and classifying an entity as a controlled foreign corporation (CFC)
  • Categories of foreign base company income: foreign personal holding company income, foreign base company sales income, foreign base company services income.
  • Allocation of deductions to foreign base company income.
  • Determining Global Intangible Low-Taxed Income (GILTI).
  • Classification of a personal foreign investment company (PFIC).
  • Section 1291 Tax and Interest Regime.
  • Section 1295 QEF Election.
  • Section 1296 Mark-to-Market Regime.

Click here for more IRS approved CE/CPE webinars on | 1040 | Tax Updates | IRS Audit, Representation and Resolutions |

Learning Objectives

Upon successful completion of this course, participants will be able:

  • To describe and classify an entity as a CFC.
  • To analyze transactions to determine whether the transaction produces foreign base company income.
  • To discuss the components of GILTI.
  • To calculate GILTI.
  • To identify and apply the test for classifying an entity as a PFIC.
  • To describe the inclusion mechanisms for U.S. shareholders of a PFIC.

Recommended For

  • This IRS approved CE webinar is recommended for CPA, EA, AFSP, and Other Tax Professionals in public practice, industry, government, and education industry who advise, research, or otherwise is engaged with U.S. corporations and their foreign subsidiaries. 
  • This CPE course is also recommended for CPAs and Tax Professionals who have limited experience with cross-border taxation and are interested in expanding their knowledge base.

Who Should Attend?

  • Bookkeepers & Accountants & Tax Preparers
  • CPA (Industry)
  • CPA - Mid Size Firm
  • CPA - Small Firm
  • CPA in Business
  • Entrepreneurial CPA
  • Tax Accountant (Industry)
  • Tax Attorney
  • Tax Director (Industry)
  • Tax Firm
  • Tax Managers
  • Tax Practitioners
  • Tax Preparer
  • Tax Professionals
  • Tax Pros
  • Young CPA

Course Qualification

Webinar Qualifies For

  • 2 CE Credit of Taxes for Enrolled Agents (EA) (Approval No. GEHNZ-T-00583-21-S)
  • 2 CPE Credit of Taxes for Certified Public Accountants (CPA-US)
  • 2 CE Credit of Federal tax-related matters for California Registered Tax Preparers (CRTP) (Approval No. 6273-CE-0557)
  • 2 CE Credit of Federal tax-related matters for Annual Filing Season Program (AFSP)
  • 2 CE Credit of Federal tax-related matters for Oregon Registered Tax Preparers (ORTP) (Approval No. GEHNZ-T-00583-21-S)
  • 2 CE Credit of Federal tax-related matters for Maryland Tax Preparer (MRTP) (Approval No. GEHNZ-T-00583-21-S)
  • 2 CE Credit for Certified Fiduciary & Investment Risk Specialist (CFIRS)
  • 2 CE Credit for Certified Wealth Strategist (CWS)
  • 2 General Credit of Taxes for Accountant/Bookkeeper/Tax Professionals

Additional details

  • Course Level :
    Basic
  • Credits :
    2
  • Instructional Method :
    QAS Self Study
  • Pre-requisites :
    None
  • Advance Preparation :
    None

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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

Jonathan Grossberg

Owner, Grossberg Continuing Education

Jonathan D. Grossberg, J.D., LL.M. (Taxation) is a licensed attorney in Pennsylvania and New York.  He is Assistant Editor, National Income Tax Workbook published by the Land Grant University Tax Education Foundation, Inc., and Adjunct Professor of Law, Temple University Beasley School of Law.  Until August 2020, he was Assistant Professor of Taxation at Robert Morris University (RMU) School of Business in Moon Township, PA.  Jonathan has taught a wide variety of tax courses to undergraduate, graduate, and law students, including federal income taxation, taxation of business entities, tax procedure, advanced income taxation, tax research, corporate tax, and international tax.  Before entering academia, Jonathan clerked for Judge Gale of the U.S. Tax Court and practiced tax law at Drinker Biddle & Reath LLP in Philadelphia and Milbank, Tweed, Hadley & McCloy LLP in New York.  Jonathan has written articles for academic and practitioner publications and made CLE/CPE presentations to lawyers and accountants on a variety of topics including tax and business ethics, judicial doctrines in tax law, partnership tax, tax issues facing small businesses, and universal basic income.

About Company

Grossberg Continuing Education


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Ratings and Review

3.4

11 Ratings

Excellent

2

Very Good

3

Average

3

Poor

3

Terrible

0

RG

Ryan Gunn, CPA (US)

Nov 10th, 2022

I paused the self study recording and when I restarted, the program stopped tracking my progress for roughly 5-10 minutes. Fortunately I was able to still finish the program without having to rewatch those 5-10 minutes.

YW

Yuye Wang, CPA (US)

Jul 30th, 2021