What is 961 basis?

§961(b), Reduction in Basis Under regulations prescribed by the Secretary, the adjusted basis of stock or other property with respect to which a United States shareholder or a United States person receives an amount which is excluded from gross income under section 959(a) shall be reduced by the amount so excluded.

What is a 962 election?

Enter the section 962 election: a relatively obscure provision of the Code designed to ensure an individual taxpayer was not subject to a higher rate of tax on the earnings of a directly-owned foreign corporation than if he or she had owned it through a United States corporation.

What is basis in a CFC?

The purpose of the basis adjustments rules of the PTEP regime is to prevent the earnings of a CFC from being taxed at the time of an income inclusion and again when the CFC shareholder sells his or her shares.

What is 951A income?

I.R.C. § 951A(a) In General — Each person who is a United States shareholder of any controlled foreign corporation for any taxable year of such United States shareholder shall include in gross income such shareholder’s global intangible low-taxed income for such taxable year.

When can I make section 962 election?

Who can make a section 962 election?

962 allows an individual U.S. shareholder to make an annual election to be taxed as a C Corporation on certain specific income earned by its foreign subsidiary (including GILTI). By making this election, the shareholder may claim an indirect foreign tax credit for foreign taxes the corporation paid.

What income is Gilti?

GILTI is income earned abroad by controlled CFCs—i.e., controlled subsidiaries of U.S. corporations—from easily movable intangible assets, such as IP rights. The tax on GILTI is intended to discourage moving intangible assets and related profits to countries with tax rates below the 21% U.S. corporate rate.

Who must pay Gilti tax?

Finally, 10% U.S. shareholders must pay tax on the aggregate of the CFC’s “global intangible low-taxed income,” or GILTI – this also is not subpart F income.

Can an LLC be a CFC?

How Does a Controlled Foreign Corporation Work? The IRS considers only non-U.S. companies and only companies that are taxed as corporations (including LLC’s that elect to be taxed as a corporation) when deciding whether a company is a CFC.

What qualifies a CFC?

In the U.S., a CFC is a foreign corporation in which U.S. shareholders own more than 50% of the total combined voting power of all voting stock or the total value of the company’s stock.