25 Percent Foreign-Owned—A corporation is 25 percent foreign-owned if it has, at any time during the taxable year, at least one direct or indirect 25 percent foreign shareholder (a foreign person owning at least 25 percent of the total voting power of all classes of stock of such corporation entitled to vote or the total value of all classes of stock of such corporation). The attribution rules of IRC 318 apply, with modifications. See IRC 6038A(c)(5).Attribution under section 318.

trade or business and of a type with respect to which a depreciation deduction is generally allowable; the difference is the shareholder’s GILTI. [IRC Sec. 951A.]In the case of an individual, the maximum federal tax rate on GILTI is 37%. This is the rate that will apply, for example, to a U.S. citizen who directly owns at least 10% of the stock of a CFC.More forgiving rules apply in the case of a U.S. shareholder that is a C corporation. For taxable years beginning after December 31, 2017, and before January 1, 2026, a regular domestic C corporation is generally allowed a deduction of an amount equal to 50% of its GILTI; thus, the federal corporate tax rate for GILTI is actually 10.5% (the 21% flat rate multiplied by 50%). [IRC Sec. 250(a)(1)(B).] However, see the election under IRC Sec. 962. IRC Sec. 951(a). In effect, the Code treats the U.S. Shareholder of a CFC as having received a current distribution of their share of the CFC’s Subpart F income. An actual or deemed shareholder. IRC Sec. 318(a)(2)(C), as modified by IRC Sec. 958(b)(2) and (3). The shareholder. IRC Sec. 318(a)(3)(C). The “TCJA”; Pub. L. 115-97. The ownership attribution rules for determining constructive ownership of corporate stock under IRC Sec. 318 and former Sec. 958(b)(4). Former IRC Sec. 958(b)(4)’s application of IRC Sec. 318(a)(3)(C). Similarly, see IRC Sec. 958(b)(1), which provides that in applying the family attribution rules of IRC Sec. 318(a), stock owned by a nonresident alien individual (other than a foreign trust or foreign estate) shall not be considered as owned by a U.S. citizen or by a resident alien individual. You may recall that the TCJA was passed using the Senate’s Budget Reconciliation Procedure. The Democrats were not happy campers – the legislation was pushed through strictly along party lines. See below. IRC Sec. 958(b)(4). The provision was effective for the last taxable year of a foreign corporation beginning before January 1, 2018, and for each subsequent year of such foreign corpora

In addition, however, an SFC also includes a foreign corporation that is owned at least 10% (by vote, for years before 2017, or also value for 2017) by a U.S. corporation. Ownership determinations for CFCs have always included the IRC Section 318 constructive ownership rules. For the 2017 Tax Year, however, the application of the constructive ownership rules to SFCs creates subtle and surprising results.

izes” the income, and income realized by a foreign corporation beyond the control of the taxpayer is not realized by the taxpayer. The Supreme Court in Moore might rule that a shareholder who is a member of the control group of shareholders may be considered as realizing the income for constitutional purposes. That does not necessarily resolve the constitutional issue for Altria because its relationship to ABI-United States Subsidiary still may be too attenuated as a constitutional matter. Civil Action No. 3:23-CV-293-MHL E.D. Va. (5-1-23). The proceedings currently are stayed pending a decision by the United States Supreme Court in Moore v. United States, No. 22-800, argued (U.S. Dec. 5, 2023). “Whether or not legislative history is ever relevant, it need not be consulted when, as here, the statutory text is unambiguous.” U.S. v. Woods, 571 U.S. 31, 46 (U.S., 2013). IRC §951(b). IRC §957(a). IRC §958(b). P.L. 115-97 (2017). IRC §958(b)(4), applying the constructive ownership rules of IRC §318(a) to Subpart F. IRC §§951(b), 957(a). Committee Print, Reconciliation Recommendations Pursuant to H. Con. Res. 71, S. Prt. 115-20, (December 2017), as reprinted on the website of the Senate Budget Committee, available at https://www.budget.senate.gov/taxreform (Explanation of Provision at p. 383: “This provision is not intended to cause a foreign corporation [ABI Foreign Subsidiaries] to be treated as a controlled foreign corporation with respect to a U.S. shareholder [Altria] as a result of attribution of ownership under section 318(a)(3) to a U.S. person [ABI United States Subsidiary] that is not a related person (within the meaning of section 954(d)(3)) to such U.S. shareholder [Altria] as a result of the repeal of section 958(b )(4).” (Explanatory insertions added.) The Government’s answer denies that the Budget Committee Report is legislative history. Tax Cuts and Jobs Act – Conference Report; Congressional Record Vol. 163, No. 207 (Senate - December 19, 2017) Page S 8110.H.R. Rep.

In those years, 1 percent of the LLC was instead owned by a marital trust established for the benefit of the individual and 99 percent by an irrevocable grantor trust also “owned” by the individual. Applying the ownership attribution rules of IRC § 318(a), the ATT agreed with the ADOR that the taxpayer was owned entirely by the individual. The ATT also rejected the taxpayer's alternate argument that the applicable law should be interpreted as allowing an entity to qualify for Family LLE status so long as one individual owned at least 80 percent of the entity.

See Proposed Regulations at 29119.See 26 U.S.C. §§ 318(a), 958(b).See Final Regulations at 3655 (adding 26 C.F.R. § 1.958-1(d)(3)(i)(B)(2)); Proposed Regulations at 29116.

E-signatures and e-consents that comply with the Electronic Signatures in Global and National Commerce Act are acceptable in lieu of in-person wet ink signatures. The Forgiveness FAQs note that those amounts are included in cash compensation under family attribution rules of 26 U.S.C. 318.[View source.]

[xlii] Attribution rules are applied for this purpose. IRC Sec. 318. [xliii] Very much a facts and circumstances determination, depending, among other things, upon whether the stock was voting or nonvoting, and how the redemption affected the shareholder’s ability to exercise a degree of control.

26 C.F.R. § 1.6038A-2(b)(4). 26 C.F.R. § 1.6038A-1(e) (citing 26 U.S.C. § 318). 26 C.F.R. § 1.6038A-1(c)(1).

Another variation of the IRC § 351 exchange, which is particularly useful where the target company is an S corporation, is for the target company to contribute assets to the holding company in exchange for holding company stock and cash.There are several potential tax problems associated with the IRC § 351 exchange. If the plan calls for the rollover participants to own 50% or more of the holding company's (including constructive ownership under IRC § 318) stock as part of the holding company formation transaction, the IRC § 304 rules should be carefully reviewed because falling within the scope of that provision would result in the cash boot being taxed at ordinary dividend income rates. There is also a possibility of additional taxable income being triggered under IRC § 357, which governs the assumption of liabilities by the newly-formed holding company.