Page 780 - Large Business IRS Training Guides

Pro Rata Share, E&P

Deficit

& Internal Group Transactions

• A pro rata share
transaction is presumed to be undertaken with a

principal
purpose of changing the amount of a U.S. shareholder.

• A pro rata share transaction means either a pro rata share reduction
transaction or
an E&P deficit transaction.

• A pro rata share reduction transaction means a transfer of the stock of
by either a U.S. shareholder of the SFC or a person related to
an SFC
the U.S.
shareholder of the SFC to a person related to the U.S.
shareholder i
f the transfer would, without regard to the anti-abuse rule:
shareholder’s pro rata share of the SFC’s section
• Reduce the U.S.
965(a)
earnings amount,

shareholder’s pro rata share of the cash position of
• Reduce the U.S.
SFC, or
the
• Both.

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