Page 66 - International Taxation IRS Training Guides

Individual Foreign Corporation

a U.S. individual investing through a
 Income earned by
not subject to U.S. tax until
foreign corporation i s
it triggers one of the anti-deferral rules
distributed, unless
listed below:

• Controlled Foreign Corporation – Similar to a domestic

corporation, a U.S. individual that is a U.S. shareholder in
a CFC will be subject to current U.S. taxation on the pro

rata share of a CFC’s subpart F income.

− However, the subpart F income is taxed at the individual rate (not

AND an individual is not entitled to foreign tax
the corporate rate)
foreign taxes paid or accrued by the CFC.
credits on any
− An individual MAY
make a section 962 election to be subject to

tax on its subpart F income as if it were a domestic corporation

(but must still pay
shareholder-level tax).
• Passive
Foreign Investment Corporation – A U.S.
investment in a PFIC may also be subject to
individual’s
U.S. tax.
current
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