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Possessions Corporation

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Possessions corporation
A type of corporation permitted under the US tax code whose branch operation in a US possession can obtain tax benefits as though it were operating as a foreign subsidiary.

Possessions Corporation
A U.S. corporation that does a significant amount of business in an American overseas possession, usually in Puerto Rico. The IRS allows these corporations to take a tax credit for the business they conduct in the possessions. See also: Form 5735.


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936 Possessions Corporation Issues Consistent with the fact they are excluded from a federal consolidated return, section 936 possessions corporations are generally excluded from the water's-edge group.
These corporations include FSCs, IC-DISCs, S corporations, electing S corporations, personal service corporations, controlled foreign corporations (CFCs), personal CFCs, certain tax-exempt organizations, possessions corporations, certain cooperative associations and certain corporations with required tax years.
Observation: The court has given taxpayers greater flexibility in avoiding the application of the subpart F provisions; however, this ruling can have repercussions in other situations in which the determination of whether an entity is engaged in manufacturing is relevant, such as with foreign sales corporations and possessions corporations.
 
 
 
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