Is foreign personal holding company income Subpart F?

What is foreign personal holding company income?

Foreign personal holding company income (FPHCI) is defined for U.S. controlled foreign corporation rules and, with modifications, for U.S. foreign tax credit rules. It consists of interest, dividends, rents, royalties, gains on property producing FPHCI, and certain other items.

What is included in Subpart F income?

952 of the Code defines Subpart F income to include the following items: insurance income, foreign base company income (FBCI), international boycott factor income, illegal bribes and kickbacks, and income derived from certain designated terrorism-sponsoring countries.

What is excluded from foreign personal holding company income?

Foreign personal holding company income shall not include rents or royalties that are derived in the active conduct of a trade or business and received from a person that is not a related person (as defined in section 954(d)(3)) with respect to the controlled foreign corporation.

Can a foreign corporation be a personal holding company?

Foreign corp. will qualify as a foreign personal holding company (“FPHC”)(IRC 954(c)(1)) by investing only in passive income (generally consisting of dividends, capital gains, interest, rents, royalties, and annuities) producing assets; … Foreign corp.

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Are royalties subpart F income?

Rents and royalties that are derived in the active conduct of a trade or business and that are received from an unrelated person are generally excluded from the definition of Subpart F income (I.R.C. Search7RH 954(c)(2)(A)).

What is the de minimis rule for Subpart F income?

De minimis is defined as annual Subpart F income that is the lesser of 5% of gross income of the CFC or $1 million. Alternatively, there is a full inclusion rule for Subpart F income that requires 100% inclusion if the sum of the annual CFC’s Subpart F income exceeds 70% of total gross income of the CFC.

How is Subpart income reported?

If you have an individual that is a US shareholder of a CFC, then any Subpart F inclusion should be reported on Form 1040 line 21 as “Other Income”.

Is interest income subpart F income?

As such, the provisions of Subpart F require a U.S. shareholder to include its pro-rata share of the CFC’s FPHCI in income currently. FPHCI generally includes a CFC’s income from dividends, interest, annuities, rents, royalties, and net gains on dispositions of property, and many more.

Is Subpart F taxable in NY?

New York Tax Law provides that when computing NY taxable income, Subpart F income is removed from the tax base (N.Y. Tax Law Section 208 (6-a)). … It does not include GILTI which is taxed under Section 951A.

What is foreign base company sales income?

One such type of income is Foreign Base Company Sales Income (FBCSI), which is income derived by a CFC from a purchase or sale* of personal property involving a related party in which the goods are both manufactured and sold for use/consumption outside the CFC’s country of organization.

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What is look through rule?

THE LOOK-THROUGH RULE: PROTECTING AN INTERNATIONAL SHELL GAME. The CFC Look-Through Rule allows companies to dodge taxes on Subpart F income by removing their obligation to report the transactions that create it.

What is the high tax exception?

Definition of high tax – The GILTI high tax exception applies only if the CFC’s effective foreign rate on GILTI gross tested income exceeds 18.9% (i.e., more than 90% of the U.S. corporate income tax rate of 21%) and the U.S. shareholder elects for that year to exclude the high-taxed income.