FTC SPLITTING EVENTS FROM FOREIGN-INITIATED ADJUSTMENTS

[...]Section 909(b) says that with respect to a splitting event of foreign income tax that a Section 902 corporation (as defined in Section 909) paid or accrued, the tax is not taken into account for purposes of Sections 902, 960, or 964(a) before the year in which the related income is taken into a...

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Bibliographic Details
Published in:Corporate Taxation 2017-03, Vol.44 (2), p.16
Main Authors: Fischl, Alan, Anson, Tim, Sotos, David, Difronzo, Michael, Urse, Michael, Collins, Marty
Format: Article
Language:English
Subjects:
Controlled foreign corporations
Disregarded entities
Double taxation
Foreign tax credits
Income taxes
Liability
Profits
Stockholders
Tax base
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Summary:[...]Section 909(b) says that with respect to a splitting event of foreign income tax that a Section 902 corporation (as defined in Section 909) paid or accrued, the tax is not taken into account for purposes of Sections 902, 960, or 964(a) before the year in which the related income is taken into account for U.S. federal income tax purposes by the Section 902 corporation or a U.S. corporation that meets the ownership requirements of Section 902(a) or (b) with respect to the Section 902 corporation. The Notice says that for foreign taxes paid on or after September 15, 2016, the future regulations will include such transactions as foreign tax credit splitting events subject to Section 909, unless the taxpayer demonstrates through clear and convincing evidence that the transactions or distributions were not undertaken with a principal purpose of creating a separation of the foreign taxes. Because of the broad scope of transactions described in the Notice, and the inclusion of corporate distributions by foreign corporations, many taxpayers may be unknowingly subject to the new rules with respect to foreign tax payments on or after September 15, 2016, that relate to prior tax years.
ISSN:1534-715X