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.
References in periodicals archive ?
Because possessions corporations are domestic corporations, they are subject to U.
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.
possessions corporations is prepared every two years on the activities of domestic corporations that qualify for a possession's tax credit by deriving at least 80 percent of gross income from sources within a qualifying U.
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.
For 2003, possessions corporations were subject to a limitation concerning the possessions tax credit derived from their active business incomes.
The proposed regulations also produce inconsistent results between the treatment of possessions corporations that elect the profit-split method and those that elect the cost-sharing method.
Due to transition rules, existing possessions corporations can claim credits through taxable years beginning before January 1, 2006 [10].
Possessions corporations should continue to realize a reasonable return on manufacturing intangibles.
There ensued, therefore, the tax-free transfers to possessions corporations or controlled foreign corporations operating in taxhaven environments.
possessions corporations located in Puerto Rico continued to report virtually all of the possessions tax credits (Figure B).
For 1997 and 1999, possessions corporations were subject to limitations related to their active business incomes relative to the possessions tax credit.