Foreign base company income

Foreign base company income

A category of Subpart F income that includes foreign holding company income and foreign base company sales and service income.

Foreign Base Company Income

Sales that a company earns or passive income that a holding company receives from a foreign source. Foreign base company income must be reported to the IRS and it is taxable in the United States. It is reported on Subpart F.
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Specifically, Subpart F of the Code, which sets the rules for taxing foreign base company income (and which has been expanded several times since its enactment in 1962), impedes U.
Subpart F income includes foreign base company income, which in turn includes FPHCI.
For more information, see "Significant Changes to Definitions of Foreign Base Company Income," JofA, Jan.
In essence, FPHC income represents a category of foreign base company income of a Controlled Foreign Corporation (CFC) which, when earned, triggers a constructive dividend under Subpart F to the U.
However, the net foreign base company income of a controlled foreign corporation that is attributable to such tax-exempt interest shall be treated as tax-exempt interest in the hands of the U.
952(a)(2) foreign base company income comes into play.
Let me offer two brief examples--our regime for taxing foreign base company income under Subpart F and our foreign tax credit regime, both of which impede our ability to compete.
The most common component of subpart F income is foreign base company income, which consists of FPHC income (FPHCI) (e.
De Minimis Rule for Subpart F Income: Section 954(b)(3) of the Code provides that no part of a CFC's gross income is treated as foreign base company income (FBCI) if its FBCI and insurance income for the year is less than the smaller of(i) five percent of its gross income for the year or (ii) $1 million.
954(a) defines foreign base company income to include (1) most types of passive income, (2) sales income for which neither manufacturing nor sales occur within the CFC's country, (3) many types of services income for which the services are performed outside the CFC'S country for a related party, (4) most types of shipping income (unless the shipping activity begins and ends in the CFC's country) and (5) certain types of oil-related income.
the 5-percent and 70-percent gross income thresholds in sections 954(b)(3)(A) and 954(b)(3)(B), respectively, and, perhaps, the section 954(b)(4) exclusion for high-foreign-taxed foreign base company income.
However, the net foreign base company income attributable to exempt interest is treated as tax-exempt in the hands of the foreign corporation's U.
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