Possessions corporation

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 California has no counterpart to section 936(h), an excluded 936 possessions corporation that used the federal profit split on its federal return has audit exposure for California state tax purposes under California's version of section 482 of the Internal Revenue Code.
The Operation and Effect of the Possessions Corporation System of Taxation; First Annual Report.
Whether as a result of previous tax acts (e.g., providing guidance to distinguish a product-line extension from a new trade or business in connection with the operation of a possessions corporation under the amendments to Code section 936 as revised by the Small Business Job Protection Act of 1996) or as a result of ongoing developments in the tax law (e.g., the need to clarify capitalization issues because of controversies in the after math of the INDOPCO decision), the IRS must tend to this important, though unfinished, business even as it shifts its resources to meet the pressing demands imposed by the 1997 legislation.
In general, to qualify for the possessions tax credit, a corporation must be a domestic corporation (organized under the laws of one of the 50 states), and have filed Form 5712, Election To Be Treated as a Possessions Corporation Under Section 936.
Section 936 of the Code generally provides an electing domestic corporation (the "possessions corporation") with a tax credit equal to the portion of U.S.
Assuming MTM is unavailable, the CPI methodology will apply to the cost-sharing possessions corporation's intangibles or to its sales of tangible property incorporating intangibles.
90-50.) Under the 1991 revenue procedure, a taxpayer that has elected cost sharing may change its election to the profit-split (or cost-plus) method, as long as the change is made on the possessions corporation's timely filed tax return (including extensions) for its fifth taxable year beginning after December 31, 1986; thus, for calendar-year taxpayers, the current deadline for changing the section 936(h) election (with the automatic consent of the Secretary) is September 15, 1992.
The White Paper's analysis of the arm's-length return method is focused on the issues which have faced the IRS (the possessions corporation manufacturing arms in Lilly and Searle, and the offshore marketing arms in DuPont and Hospital Corporation of America).
In general, to qualify for the possessions tax credit, a corporation must be a domestic corporation (organized under the laws of one of the 50 states) and have filed Form 5712, Election To Be Treated us a Possessions Corporation Under Section 936.
Possessions Biannually Forms 1120-Corporate Corporations Income Tax Return, Form 5712-Election to be Treated as a Possessions Corporation and Form 5735-Possessions Corporation Tax Credit Allowed Under Section 936 Individual Foreign Tax Every fifth Form 1040-U.S.
In general, to qualify for the possessions tax credit, a corporation must be a domestic corporation, organized under the laves of one of the 50 states, and have filed Form 5712, Election To Be Treated as a Possessions Corporation under Section 936.
corporation must have filed Form 5712, Election to be Treated as a Possessions Corporation under Section 936.