Page 619 - Large Business IRS Training Guides

Tested Income and Tested Loss
4

Allocable

Tested loss = deductions -
Gross tested

income

Tested loss is the excess of allocable deductions over gross tested

income, i.e., when Gross Tested Income – Allocable Deductions < 0

In any given tax year,

a CFC is either…

• a tested income CFC or

• a tested loss CFC,

…not both!

Section 951A(c)(2)(B) and Treas. Reg. §1.951A-2(b)(2). 35