Page 641 - Large Business IRS Training Guides

CFC Notional QBAI Example
Tested Loss 2

• US shareholder-level
determination; pro

rata share and specified interest

expense.

• USP’s pro rata share of CFC1’s
tested interest expense is $200, its

pro rata share of CFC2’s tested
interest expense is $350, and its pro

rata share of CFC2’s tested interest

$200.
income is
$200 $500

• USP’s aggregate pro rata share of
tested interest expense is $550, and

its aggregate pro rata share of tested
“Notional QBAI”: $1,500 interest income is $200.

USP’s specified interest
• Accordingly,
expense is $350 ($550 - $200).

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