Page 640 - Large Business IRS Training Guides

CFC Notional QBAI Example
Tested Loss 1

• CFC-level determination;
tested
interest expense and tested interest

income

$200 of tested interest
• CFC1 has
expense and no tested interest

income.

• CFC2 has
$200 of tested interest
$1,500 in
income and basis of
that would be
$200 $500 tangible property
QBAI
if CFC2 were instead a
tested income CFC (“notional

QBAI”).

“Notional QBAI”: $1,500
tested interest expense
• CFC2’s
is $350 ($500 interest expense –

[10% of $1,500 notional
QBAI]).

56