Page 165 - International Taxation IRS Training Guides

Participation Exemption (Cont'd)

dividends, investments in US
 In addition to actual

property
by a CFC are substantially equivalent to
and therefore are taxed under subpart F
dividends

 With the enactment of the participation exemption,

certain actual
dividends are not taxed but income

from investments in US property remain
inclusions
subject
to tax

 To maintain symmetry,
Treasury and the IRS issued

regulations
to not tax such inclusions to the extent that
such inclusions
would not be taxed if the amount was

received as an actual
dividend

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