C-Corps Exempt From Full Scope Of Foreign Income Inclusion

By Stanley Ruchelman (November 2, 2018, 1:36 PM EDT) -- Now that a U.S. corporation holding 10 percent of the shares of a foreign corporation can receive tax-free dividends by reason of the 100 percent dividends received deduction, or DRD, the IRS has determined that Code Section 956 should not be applied where a dividend would not be taxed.

Introduction

On Oct. 31, the IRS proposed regulations affecting controlled foreign corporations, or CFCs, and U.S. corporations that are considered to be "U.S. shareholders," as defined, when a CFC makes an investment in U.S. property. In substance, the proposed regulations adopt a simple exception to U.S. tax exposure for a U.S. corporation...

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