On Tuesday, February 7, We're offering a free, 1-hour CPE course for U.S. accountants in controlled foreign corporations. You can sign up at this link.
The ownership rules are at the heart of the controlled foreign corporation statute:
(a) General rule: For purposes of this subpart, the term “controlled foreign corporation” means any foreign corporation if more than 50 percent of--
(1) the total combined voting power of all classes of stock of such corporation entitled to vote, or
(2) the total value of the stock of such corporation,
is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation.
Majority ownership by a “U.S. shareholder” is key; once a U.S. person owns 50.01% of a foreign company, it’s a CFC. The statute assumes evenly divided ownership between a U.S. and foreign interest creates sufficient management tension to prevent issues from arising. This offers potential planning opportunities.
If you'd like to discuss this in more detail, please contact me at 832.330.4101. Or, you can email me at firstname.lastname@example.org
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