Demystifying IRS Form 5471 Schedule G

Form 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations) is used by certain U.S. persons who are officers, directors, or shareholders in respect of certain foreign entities that are classified as corporations for U.S. tax purposes. Form 5471 and its schedules are used to satisfy the reporting requirements of Internal Revenue Code Sections 6038 and 6046.

Substantively, Form 5471 backstops various international sections of the Internal Revenue Code, including Sections 901 and 904 (foreign tax credits), Section 951(a) (subpart F income), Section 951A (global intangible low-taxed income or “GILTI”), Section 965 (one-time transition tax on a U.S. shareholder’s deferred foreign income), and Section 482 (transfer pricing). Other forms associated with Form 5471 include Form 926 (Return by a U.S. Transferor of Property to a Foreign Corporation), Form 5713 (International Boycott Report), Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), and Forms 1116 and 1118 (Foreign Tax Credit).

Form 5471 includes 12 schedules. This article discusses the Schedule G of Form 5471.

Key Terms for Form 5471

Form 5471 provides for five general categories of filers, numbered 1 through 5. Two of these general categories are subdivided into three subtypes each, with each subtype being a separate filer category as well. The filer category that a taxpayer falls under dictates the schedule or schedules that the taxpayer must include with the form. In order to understand how these filer categories work, it is helpful to review some basic terms.

U.S. Person

Only U.S. persons who own stock in a foreign corporation can have a Form 5471 filing obligation. A U.S. person is generally a citizen or resident of the United States, a domestic partnership, a domestic corporation, or a domestic trust or estate, each as defined in Internal Revenue Code Section 7701(a)(30)(A) through (E). A tax-exempt U.S. entity may have a Form 5471 filing obligation. In addition, an individual who relies on the residency provision of an income tax treaty to reduce his or her U.S. income tax liability (and files Form 8833) remains a U.S. person for purposes of Form 5471. See Treas. Reg. Section 301.7701(b)-7(a)(3). There are some slight modifications to the definition of a U.S. person which will be discussed in more detail below. All of the Form 5471 filer categories apply to U.S. persons.

U.S. Shareholder

Internal Revenue Code Section 951(b) defines a “U.S. shareholder” as a U.S. citizen, resident alien, corporation, partnership, trust, or estate that owns 10 percent or more of the total combined voting power of all classes of voting stock of a foreign corporation, or 10 percent or more of the total value of all the outstanding stock of a foreign corporation. All forms of stock ownership, — i.e., direct, indirect (ownership through intervening entities), and constructive (attribution of ownership from one related party to another) — are considered in applying the 10 percent test.

Controlled Foreign Corporation (“CFC”)

A foreign corporation is a CFC if, on any day during its taxable year, all of its U.S. shareholders, taken together as a group, own more than 50 percent of the combined voting power of all classes of the foreign corporation’s voting stock, or more than 50 percent of the total value of all of the foreign corporation’s outstanding stock. See IRC Section 957(a). Only U.S. persons who constitute U.S. shareholders are considered in applying the 50 percent test. Just as in the case of the 10 percent test for determining whether a U.S. person is a U.S. shareholder, direct, indirect, and constructive ownership of stock are all considered in applying the 50 percent test for CFCs. The term “foreign,” when applied to a corporation, means a corporation that is not domestic — i.e., a corporation that is not incorporated in a U.S. state or the District of Columbia. See IRC Section 7701(a)(5).

Treasury Regulations 301.7701-2(b)(8) provides a list of foreign entities that are conclusively treated as “per se” corporations for U.S. tax purposes. An individual preparing a Form 5471 should be aware that abbreviations in an entity name such as “Ltd.” and “S.A.” do not always stand for “Limited” or “Sociedad Anonima” (or “Societe Anonyme”). The preparer should confirm what the unabbreviated terms are, preferably from a charter or other official document from the relevant jurisdiction. If a foreign entity is not in the list of per se corporations, Treasury Regulations Section 301.7701-3(b)(2) provides that, unless a contrary election is made, the foreign entity will be treated as (1) an association taxable as a corporation if all its members have limited liability, (2) a partnership it it has two or more members (at least one of which does not have limited liability), or (3) a disregarded entity if it has a single owner who does not have limited liability.

Section 965 Specified Foreign Corporation (“SFC”)

An SFC is a foreign corporation that either is a CFC or has at least one U.S. shareholder that is a domestic corporation. See IRC Section 965(e)(1). The term SFC includes not only CFCs, but also entities commonly referred to as “10/50 corporations.” These foreign corporations have at least one U.S. shareholder, but are not CFCs because U.S. shareholders do not collectively own more than 50 percent of the corporation’s stock either by vote or value.

Stock Ownership

For purposes of Form 5471, a U.S. person can own stock in a corporation in three possible ways. First, the person can own the stock “directly.” For example, owning stock in a brokerage account constitutes direct ownership of the stock. Second, the U.S. person can own the stock “indirectly” through an intervening entity, such as a corporation, partnership, estate, or trust, in which the U.S. person owns an interest. In these cases, the stock owned by the intervening entity is typically considered to be owned proportionately by its shareholders, partners, or beneficiaries, as the case may be. For example, if a U.S. person directly owns 40 percent of the stock of a corporation and that corporation, in turn, directly owns 50 percent of the stock of a second corporation, then the U.S. person is considered to own indirectly 20 percent (i.e., 40% × 50%) of the stock of the second corporation. Indirect stock ownership can extend through several layers of intervening entities, where each intervening entity directly owns an interest in the one immediately below it. The third way that a U.S. person can own stock is by “constructively” owning the stock due to a relationship with another person. This relationship most commonly involves family members. For example, if a U.S. citizen mother directly owns 6 percent of a corporation’s stock and her U.S. citizen daughter directly owns 5 percent of the same corporation’s stock, then each of them is considered to own constructively the shares of the other. As a result, the mother and daughter are each considered to own 11 percent of the corporation’s stock. Another less common relationship involves sister entities. This form of constructive ownership (referred to as downward attribution) arises when an individual or entity parent directly or indirectly owns stock in a corporation and, at the same time, owns an interest in another entity. Under downward attribution, the corporation’s stock that the parent owns is attributed downward from the parent to the second entity. As a result, the second entity is considered to own constructively the same stock owned by the parent. Generally, the stock that is owned constructively by one person due to family or downward attribution cannot be further owned constructively by another.

All three kinds of stock ownership apply when determining which Form 5471 filer category or categories a taxpayer falls under, but there are variations among the categories. For example, in Categories 2 and 3, constructive family ownership includes attribution of stock from siblings, grandparents, and nonresident aliens, whereas the other three categories do not allow for these attributions. Categories 1, 4, and 5 define indirect ownership to mean only indirect ownership through foreign intervening entities, and include indirect ownership through intervening U.S. entities as constructive upward attribution. Categories 2 and 3 specifically provide for indirect ownership, but only through entities that are foreign corporations or partnerships, and refer to this type of non-direct ownership as both indirect and constructive ownership. Constructive ownership in the form of downward attribution does not exist in Categories 2 and 3, but exists in Categories 1, 4, and 5. Category 4’s version of downward attribution prohibits attribution of stock from a foreign entity to a U.S. person. Category 1 and 5’s version, however, contains no such prohibition due to the Tax Cuts and Jobs Act of 2017 (the “TCJA”). All these variations, as well as others not described above, will need to be taken into account when preparing a Form 5471.

Filer Categories

Form 5471, together with its applicable schedules, must be completed (to the extent required on the form) and filed by the taxpayer according to the taxpayer’s filer category. What follows is a description of each filer category.

Category 1 Filer

A Category 1 filer is a U.S. shareholder of a foreign corporation that is an SFC at any time during the corporation’s taxable year. However, to be classified as a Category 1 filer, the U.S. shareholder of the SFC must also own the SFC’s stock on the last day of the SFC’s taxable year.

The stock ownership rules applicable to Category 1 (including Categories 1a, 1b, and 1c) are contained in Internal Revenue Code Section 958, which incorporates and modifies the constructive stock ownership rules of Section 318(a). For Category 1 purposes, if a person does not directly own stock, the person can own stock as follows:

• Indirect stock ownership through an intervening entity. The intervening entity (i.e., a corporation, partnership, estate, or trust) can only be a foreign entity. The person, who is to become the indirect owner of stock through the intervening entity, is not required to hold a minimum ownership interest (i.e., stock, partnership interest, or beneficial interest) in the intervening foreign entity.
• Constructive stock ownership from another person.
  • Attribution from family members. A person can only be attributed stock owned by his or her parent, spouse, child, or grandchild. However, no attribution is permitted from a nonresident alien to a U.S. citizen or resident.
  • Upward attribution from entities. The attributing entity can be either a U.S. or foreign entity. However, if the attributing entity is a corporation, the person to whom the stock is to be attributed must own at least 10 percent (by value) of the attributing entity’s stock. Furthermore, if the stock to be attributed upward constitutes more than 50 percent of a corporation’s voting stock, then the stock is deemed to constitute 100% of the corporation’s voting stock when it gets proportionately allocated among the attributing entity’s owners.
  • Downward attribution from persons. The attributing person can be either an individual or entity. However, if the stock is to be attributed downward to a corporation, the attributing person must own at least 50 percent (by value) of that corporation’s stock.

Category 1a, 1b, and 1c Filers

Category 1 is subdivided into Categories 1a, 1b, and 1c. Category 1a is a catchall category and applies to Category 1 filers who do not otherwise fall under either Category 1b or 1c. Categories 1b and 1c were added to Form 5471 as the result of Revenue Procedure 2019-40, which the IRS issued in response to the repeal of provisions in Section 958(b) that previously disapplied the constructive downward attribution rules of Section 318(a)(3) to the extent that they attributed stock owned by a foreign person to a U.S. person.

Categories 1b and 1c specifically apply to those SFCs that are considered to be foreign-controlled for purposes of Form 5471. Such an SFC, referred to herein as a “Foreign-Controlled SFC,” is a foreign corporation that, although classified as an SFC, would not be so classified if the determination were made without applying Section 318(a)(3)’s downward attribution rules so as to consider a U.S. person as owning the stock owned by a foreign person.

A Category 1b filer is a U.S. shareholder who owns, directly or indirectly under Section 958(a) (but not constructively under Section 958(b)), the stock of a Foreign-Controlled SFC and is not related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled SFC. Section 954(d)(3) defines two persons as being “related” to each other in terms of “control,” where one person controls or is controlled by the other, or is controlled by the same person or persons who control the other. Here, control over a corporation means directly or indirectly owning more than 50 percent of the corporation’s stock by either vote or value. A Category 1b filer is typically a shareholder who owns, directly or indirectly, stock in a foreign corporation but is not related to the foreign corporation because the common parent of both the shareholder and the foreign corporation does not control the foreign corporation.

A Category 1c filer is a U.S. shareholder who does not own, either directly or indirectly, the stock of a Foreign-Controlled SFC but is related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled SFC. A Category 1c filer is typically a shareholder that owns the stock of a foreign corporation only because of constructive stock ownership under Section 318(a)(3) and the shareholder is related to the foreign corporation because each of them is under the control of a common parent.

A U.S. shareholder who does not own, either directly or indirectly, the stock of a Foreign-Controlled SFC and is not related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled SFC, is neither a Category 1b nor 1c filer. Such U.S. shareholder is deemed not to fall under the Category 1a catchall and is exempt from the obligation to file Form 5471.

Category 2 Filer

A Category 2 filer is a U.S. person who is an officer or director of a foreign corporation in which there has been a substantial change in its U.S. ownership. A U.S. person can be a Category 2 filer even if the change relates to stock owned by another U.S. person and regardless of whether or not that other U.S. person is an officer or director of the foreign corporation. For Category 2 purposes, a U.S. person is defined as a U.S. citizen, resident alien, corporation, partnership, estate, or trust. However, Category 2 also expands the definition of a U.S. person to include a bona fide Puerto Rico resident, a bona fide possessions resident, and a nonresident alien as to whom a Section 6013(g) or (h) election is in effect (i.e., where a nonresident alien spouse has made an election to be taxed as a U.S. person). In regard to the definition of an officer or director, there is no clear answer as to what constitutes an officer or director for purposes of a Category 2 filer. Treasury Regulations Section 1.6046-1(d) provides that “persons who would qualify by the nature of their functions and ownership in such associations, etc., as officers, directors, or shareholders thereof will be treated as such for purposes of this section without regard to their designations under local law.”

For purposes of Category 2, a substantial change in U.S. ownership in a foreign corporation occurs when any U.S. person (not necessarily the U.S. citizen or resident who is the officer or director) either (1) acquires stock that causes that U.S. person to own a 10 percent block of stock in that foreign corporation (by vote or value) or (2) acquires an additional 10 percent block of stock in that corporation (by vote or value). More precisely, if any U.S. person acquires stock that, when added to any stock previously owned by that U.S. person, causes the U.S. person to own stock meeting the 10 percent stock ownership requirement, the U.S. officers and directors of that foreign corporation must report. A disposition of shares in a foreign corporation by a U.S. person, however, does not create filing obligations under Category 2 for U.S. officers and directors of that foreign corporation.

The stock ownership rules applicable to Category 2 are contained in Internal Revenue Code Section 6046(c) and Treasury Regulations Section 1.6046-1(i). For Category 2 purposes, if a person does not directly own stock, the person can own stock as follows:

• Constructive stock ownership from another person.
  • Attribution from family members. A person can only be attributed stock owned by his or her brother, sister, spouse, ancestors, and lineal descendants. Attribution from nonresident aliens is permitted.
  • Upward attribution from entities. The attributing entity can be either a foreign corporation or a foreign partnership. The person, who is to become the constructive/indirect owner of stock through the attributing foreign corporation or partnership, is not required to hold a minimum ownership interest (i.e., stock or partnership interest) in the attributing foreign corporation or partnership. By negative implication, there is no attribution of stock from U.S. entities, or from foreign estates or trusts. Nevertheless, stock owned by U.S. entities that are not treated as entities separate from their owners for U.S. income tax purposes (i.e., grantor trusts and disregarded entities) should be attributable to their owners.

Category 3 Filer

A U.S. person who owns stock in a foreign corporation is a Category 3 filer if any one of the following events occurs during the taxable year:

1. The U.S. person acquires stock in the corporation that, when added to any stock already owned by the person, causes the person to own at least 10 percent (by vote or value) of the corporation’s stock.
2. The U.S. person acquires stock that, without regard to any stock already owned by the person, constitutes at least 10 percent (by vote or value) of the corporation’s stock.
3. The U.S. person becomes a U.S. person while owning at least 10 percent (by vote or value) of the corporation’s stock.
4. The U.S. person disposes of sufficient stock in the corporation to reduce the person’s interest to less than 10 percent (by vote or value) of the corporation’s stock.
5. The U.S. person owns at least 10 percent (by vote or value) of the corporation’s stock when the corporation is reorganized.

For Category 3 purposes, a U.S. person is defined as a U.S. citizen, resident alien, corporation, partnership, estate, or trust. However, Category 3 also expands the definition of a U.S. person to include a bona fide Puerto Rico resident, a bona fide possessions resident, and a nonresident alien as to whom a Section 6013(g) or (h) election is in effect (i.e., where a nonresident alien spouse has made an election to be taxed as a U.S. person).

The stock ownership rules applicable to Category 3 are the same as the ones applicable to Category 2, as described above under “Filer Categories–Category 2 Filer.” These rules are contained in Internal Revenue Code Section 6046(c) and Treasury Regulations Section 1.6046-1(i).

Category 4 Filer

A U.S. person is a Category 4 filer with respect to a foreign corporation for a taxable year if the U.S. person controls the foreign corporation. For Category 4 purposes, a U.S. person is defined as a U.S. citizen, resident alien, corporation, partnership, estate, or trust. However, Category 4 also expands the definition of a U.S. person to include a bona fide Puerto Rico resident, a bona fide possessions resident, and a nonresident alien as to whom a Section 6013(g) or (h) election is in effect (i.e., where a nonresident alien spouse has made an election to be taxed as a U.S. person). See Treas. Reg. Section 1.6038-2(d).

A U.S. person is considered to “control” a foreign corporation for purposes of Category 4 if at any time during the person’s taxable year, such person owns more than 50 percent of the combined voting power of all classes of the foreign corporation’s voting stock, or more than 50 percent of the total value of all of the foreign corporation’s outstanding stock. See IRC Section 6038(e)(2). It is important to note that the concept of control here for Category 4 filers is distinct from the one in the definition of CFC, a term used for Category 1 and Category 5 filers. There, control over a foreign corporation exists when more than 50 percent (by vote or value) of the corporation’s stock is owned by one or more U.S. shareholders, each of whom individually owns at least 10 percent of the corporation’s stock. By contrast, a Category 4 filer is a single U.S. person who individually owns more than 50 percent (by vote or value) of the foreign corporation’s stock.

The stock ownership rules applicable to Category 4 are contained in Internal Revenue Code Section 6038(e)(2), which incorporates and modifies the constructive stock ownership rules of Section 318(a). For Category 4 purposes, if a person does not directly own stock, the person can own stock as follows:

• Constructive stock ownership from another person.
  • Attribution from family members. A person can only be attributed stock owned by his or her parent, spouse, child, or grandchild. Attribution from nonresident aliens is permitted.
  • Upward attribution from entities. The attributing entity can be either a U.S. or foreign entity. However, if the attributing entity is a corporation, the person to whom the stock is to be attributed must own at least 10 percent (by value) of the attributing entity’s stock. Furthermore, because Section 6038(e)(2) defines control for purposes of Category 5 as owning more than 50% (by vote or value) of a corporation’s stock, if a person controls a corporation that, in turn, owns more than 50% (by vote or value) of the stock of a second corporation, then such person will be treated as in control of the second corporation as well.
  • Downward attribution from persons. The attributing person can be either an individual or entity. However, if the stock is to be attributed downward to a corporation, the attributing person must own at least 50 percent (by value) of that corporation’s stock. Furthermore, no downward attribution is allowed if it results in a U.S. person constructively owning stock that is owned by a foreign person (as the attributing person).

Category 5 Filer

A Category 5 filer is a U.S. shareholder of a foreign corporation that is a CFC at any time during the corporation’s taxable year. However, to be classified as a Category 5 filer, the U.S. shareholder of the CFC must also own the CFC’s stock on the last day of the CFC’s taxable year.

The stock ownership rules applicable to Category 5 (including Categories 5a, 5b, and 5c) are the same as the ones applicable to Category 1 (including Categories 1a, 1b, and 1c), as described above under “Filer Categories–Category 1 Filer.” These rules are contained in Internal Revenue Code Section 958, which incorporates and modifies the constructive stock ownership rules of Section 318(a).

Category 5a, 5b, and 5c Filers

Category 5 is subdivided into Categories 5a, 5b, and 5c. Category 5a is a catchall category and applies to Category 5 filers who do not otherwise fall under either Category 5b or 5c. Categories 5b and 5c were added to Form 5471 as the result of Revenue Procedure 2019-40, which the IRS issued in response to the repeal of provisions in Section 958(b) that previously disapplied the constructive downward attribution rules of Section 318(a)(3) to the extent that they attributed stock owned by a foreign person to a U.S. person.

Categories 5b and 5c specifically apply to those CFCs that are considered to be foreign-controlled for purposes of Form 5471. Such a CFC, referred to herein as a “Foreign-Controlled CFC,” is a foreign corporation that, although classified as a CFC, would not be so classified if the determination were made without applying Section 318(a)(3)’s downward attribution rules so as to consider a U.S. person as owning the stock owned by a foreign person.

A Category 5b filer is a U.S. shareholder who owns, directly or indirectly under Section 958(a) (but not constructively under Section 958(b)), the stock of a Foreign-Controlled CFC and is not related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled CFC. Section 954(d)(3) defines two persons as being “related” to each other in terms of “control,” where one person controls or is controlled by the other, or is controlled by the same person or persons who control the other. Here, control over a corporation means directly or indirectly owning more than 50 percent of the corporation’s stock by either vote or value. A Category 5b filer is typically a shareholder who owns, directly or indirectly, stock in a foreign corporation but is not related to the foreign corporation because the common parent of both the shareholder and the foreign corporation does not control the foreign corporation.

A Category 5c filer is a U.S. shareholder who does not own, either directly or indirectly, the stock of a Foreign-Controlled CFC but is related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled CFC. A Category 5c filer is typically a shareholder that owns the stock of a foreign corporation only because of constructive stock ownership under Section 318(a)(3) and the shareholder is related to the foreign corporation because each of them is under the control of a common parent.

A U.S. shareholder who does not own, either directly or indirectly, the stock of a Foreign-Controlled CFC and is not related (within the meaning of Section 954(d)(3)) to that Foreign-Controlled CFC, is neither a Category 5b nor 5c filer. Such U.S. shareholder is deemed not to fall under the Category 5a catchall and is exempt from the obligation to file Form 5471.

Schedule G

Category 1b and 5b filers are not required to file Schedule G. All other filers are required to file Schedule G.

Questions Asked on Schedule G “Other Information”

Line 1.

Line 1 asks the CFC shareholder if the CFC owns at least 10 percent interest, directly or indirectly, in any foreign partnership.

If the CFC owned at least 10 percent interest, directly, or indirectly in any foreign partnership, a statement must be attached to the Form 5471 listing the following information for each foreign partnership owed by the CFC:

1. Name and EIN (if any) of the foreign partnership.

2. Identify which, if any, of the following forms the foreign partnership filed for its tax year ending with or within the corporation’s tax year: Form 1042, 1065, or 8804.

3. Name of the partnership representative (if any).

4. Beginning and ending dates of the foreign partnership’s tax year.

Line 2.

Line 2 asks the CFC shareholder if during the tax year did the CFC own an interest in any trust. The CFC shareholder must provide a “yes” or “no” answer to this question.

Line 3.

Line 3 asks the CFC shareholder to check “yes” if the CFC is the owner of any foreign entities that were disregarded as separate from the owner under Regulations 301.7701-2 and 301.7701-3 or did the foreign corporation own any foreign branches. These are known as foreign disregarded entities. It is necessary to understand what a disregarded entity is for federal income tax purposes to answer this question. Under the income tax regulations, a taxpayer is permitted to elect to have a business entity treated as a separate corporation or a fiscally transparent entity (i.e., treated, for U.S. tax purposes, as a partnership or disregarded as an entity separate from its owner). See Treas. Reg. Sections 301.7701-2, and 3.

Not all business entities may elect their classification for U.S. tax purposes. Certain entities are treated as “per se” corporations for U.S. tax purposes. The types of entities that are treated under the regulations as per se corporations include entities incorporated under state law incorporation statutes and certain foreign entities listed in the regulations. See Treas. Reg. Section 301.7701-2.

Business entities not treated as per se corporations are called “eligible entities” and may elect their classification for tax purposes. If the entity has two or more members, it can elect to be classified for U.S. tax purposes as either an association taxable as a corporation or a partnership. If the entity has only a single owner, it can elect to be classified as an association taxable as a corporation or to be disregarded as an entity separate from its owner. See Treas. Reg. Section 301.7701-3(a).

If no election is made, default rules in the regulations apply. Under those default rules, if no entity classification is made, a U.S. eligible entity is treated as a partnership if it has two or more members or is disregarded as an entity separate from its owner if it has a single owner. If the entity is a foreign eligible entity and no election is made, the foreign entity is 1) treated as a partnership if it has two or more members and at least one member does not have limited liability, 2) treated as an association taxable as a corporation if all members have limited liability or 3) disregarded as an entity separate from its owner if it has a single owner that does not have limited liability. See Treas. Reg. Section 301.7701-3(b).

If the CFC is the owner of a foreign disregarded entity discussed above, the CFC shareholder must check “yes” for Line 3. This question not only asks the CFC shareholder to disclose the existence of any disregarded entity, Line 3 asks the CFC to disclose the existence of any foreign branches held by the CFC. A foreign branch is simply an extension of a corporation to another country.

If the CFC is the owner of any foreign disregarded entities or foreign branches, the CFC shareholder is a Category 4 or 5 filer, the CFC shareholder must attach a statement to the Form 5471 in lieu of Form 8858.

This statement must list the names of the foreign disregarded entity, country under whose laws the foreign disregarded entity was organized, and EIN (if any) of the foreign disregarded entity.

Line 4a.

Question 4 asks the CFC shareholder if during the tax year the CFC paid or accrued any base erosion payment under Section 59A(d) to the foreign corporation or did the CFC have a base erosion tax benefit under Section 59A(c)(2) with respect to a base erosion payment made or accrued to the foreign corporation.

In order to answer this question, the CFC shareholder must understand the meaning of a base erosion payment and base erosion tax benefit. The 2017 Tax Cuts and Jobs Act introduced the base erosion and anti-abuse tax (“BEAT”) as codified under Internal Revenue Code Section 59A, which is designed to prevent base erosion in the crossborder context by imposing a type of alternative tax, which is applied by adding back to taxable income certain deductible payments, such as interest and royalties, made to related foreign persons. The BEAT applies to corporations with gross receipts of at least $500 million over a three-year testing period and a “base erosion percentage” (as defined in Section 59A(c)(4)(A)) for the taxable year of at least 3 percent. A 2 percent threshold applies for banks and registered securities dealers. Unless the CFC at issue has gross receipts of over $500 million over a three-year testing period, the questions raised in Lines 4a, 4b, and 4c will not apply to the CFC shareholder.

Line 4a asks the CFC shareholder to state “yes” or “no” if the CFC paid a base “erosion tax payment” or if the CFC received a “base erosion payment.” According to the instructions for Schedule G, the term “base erosion payment” generally means any amount paid or accrued by the CFC filer of a foreign corporation that is a related party to the CFC shareholder within meaning of Section 59A(g) and with respect to which a U.S. deduction is allowed. (The term “related party” means: 1) any 25-percent owner of the taxpayer; 2) any person who is related (within the meaning of Section 267(b) or 707(b)(1) to the taxpayer or any 25-percent owner of the taxpayer; and 3) any other person who is related (within the meaning of Section 482) to the taxpayer). Base erosion payments also include amounts received or accrued by the CFC in connection with the acquisition of depreciable or amortizable property, reinsurance payments, and certain payments relating to expatriated entities.

The term “base erosion tax benefit” generally means any U.S. deduction for the tax year with respect to any base erosion payment.

Line 4b.

Line 4b asks the CFC shareholder to enter the total amount of base erosion payments.

Line 4c.

Line 4c asks the CFC shareholder to enter the total amount of base erosion tax benefit.

Line 5a.

Line 5a asks the CFC shareholder if the foreign corporation paid or accrued any interest or royalty for which the deduction was not allowed under Internal Revenue Code Section 267A. The 2017 Tax Cuts and Jobs Act introduced Internal Revenue Code Section 267A. This rule denies a deduction for certain royalty and interest payments to related parties known as “disqualified related party amounts” if paid or accrued either 1) pursuant to a “hybrid transaction” or 2) by or to a “hybrid entity.” A “hybrid transaction” is any transaction, series of transactions, agreements, or instruments where payments are treated as interest or royalties for federal income tax purposes and which are not so treated for purposes of the tax law of the foreign country of the recipient. A hybrid entity is an entity that is “fiscally transparent” for U.S. tax purposes but not fiscally transparent for foreign tax purposes.

When Section 267A applies, the deduction generally is disallowed to the extent the related party does not include the amount in income or is allowed a deduction with respect to the amount. However, the deduction is included in the gross income of a U.S. shareholder under Internal Revenue Code Section 951(a).

Line 5a asks if the CFC paid or accrued any interest or royalty for which the deduction is not allowed under Section 267A. The CFC must answer this question with a “yes” or “no.”

Line 5b.

Line 5b asks the CFC shareholder to state the total amount of the Section 267A disallowed deduction.

Lines 6a, 6b, 6c, 6d.

Line 6a asks the CFC shareholder if they are claiming a foreign-derived intangible income (“FDII”) deduction under Section 250 with respect to any amounts listed on Schedule M.

A discussion of Schedule M is beyond the scope of this article. In order to answer this question, the CFC shareholder must determine if a Section 250 deduction was claimed on Schedule M. Internal Revenue Code Section 250 allows a domestic C corporation a deduction for a portion of the domestic corporation’s FDII. The CFC shareholder must answer “yes” or “no” to the question stated on Line 6a. If the CFC shareholder answers “yes” to question 6a, the CFC shareholder is directed to complete Lines 6a, 6b, 6c, and 6d.

Line 6b asks the CFC shareholder to enter gross income derived from sales, leases, exchanges, or other dispositions (but not licenses) from transactions with foreign corporations that the filer included in its computation of foreign-dervived deduction eligible income (“FDDEI”). This is determined based on a multi-step calculation. First, a domestic corporation’s gross income is determined and then reduced by certain items of income, including amounts included in income under Subpart F, dividends received from CFCs and income earned in foreign branches. This amount is reduced by deductions (including taxes) properly allocable to such income, yielding deduction eligible income.

Second, the foreign portion of such income is determined. This amount includes any income derived from the sale of property to any foreign person for a foreign use. The term “sale” is specially defined for this purpose to include any lease, license, exchange, or other disposition. “Foreign use” is defined to mean “any use, consumption, or disposition which is not within the United States.” Qualifying foreign income also includes income derived in connection with services provided to any person not located within the United States, or with respect to property that is not located in the United States. The services may be performed within or outside the United states. The gross foreign sales and services income is reduced by expenses properly allocated to such income. The sum of these two amounts yields FDDEI. This amount must be translated from functional currency for the CFC’s tax year.

Line 6c asks the CFC shareholder to enter the amount of gross income derived from a license of property of the CFC that was included in the computation of FDDEI. This amount must be translated from functional currency for the CFC’s tax year.

Line 6d asks the CFC shareholder to enter the amount of gross income derived from services provided to the CFC that was included in the computation of FDDEI. This amount must be translated from functional currency for the CFC’s tax year.

Line 7.

Line 7 asks the CFC shareholder if he or she participated in any cost sharing arrangements (“CSA”). In general, a cost sharing arrangement is an arrangement between two or more persons to share the costs and risks of research and development as they are incurred. Line 7 asks the CFC shareholder to provide a “yes” or “no” answer to the question.

Line 8.

Line 8 asks if the foreign corporation purchased stock or securities of a shareholder of a foreign corporation for the use in a triangular reorganization. This is a “yes” or “no” question. In order to determine if the CFC purchased stock or securities of a foreign corporation for use in a triangular reorganization, Treasury Regulation Section 1.358-6(b)(2) must be defined. Treasury Regulation Section 1.358-6 provides rules for computing the basis of a controlled corporation in the stock of a controlled corporation as the result of certain reorganizations involving the stock of the controlled corporation. Treasury Regulation 1.358-6(2) defines triangular reorganizations (which are referred to collectively as triangular reorganizations):

(i) Forward triangular merger. A forward triangular merger is a statutory merger of T and S, with S surviving.

(ii) Triangular C reorganization. A triangular C reorganization is an acquisition by S of substantially all of T’s assets in exchange for P stock in a transaction that qualifies as a reorganization.

(iii) Reverse triangular merger. A reverse triangular merger is a statutory merger of S and T, with T surviving.

(iv) Triangular B reorganization. A triangular B reorganization is an acquisition by S of T stock in exchange for P stock in a transaction that qualifies as a reorganization.

(v) Triangular G reorganization. A triangular G reorganization is an acquisition by S (other than by statutory merger) of substantially all of T’s assets in a title 11 or similar case in exchange for P stock in a transaction that qualifies as a reorganization.

If the CFC reported on Schedule G acquired stock or securities involved in a triangular reorganization discussed above, the CFC shareholder must answer “yes” for the question raised in Line 8.

Line 9a and 9b.

Line 9a asks if the foreign corporation received any intangible property in a prior year or the current year for which the U.S. transferor is required to report a Section 367(d) annual income inclusion.

Under Internal Revenue Code Section 367(d), intangible property is treated as a special class of tainted asset. In every case involving the transfer of such assets in a transaction falling within Section 351 (Section 351(a) provides that no gain or loss shall  be recognized if property is transferred to a corporation by one or more persons solely in exchange for its shares for its stock if the transferor or transferor of property are in “control” of the corporation “immediately after the exchange), the transferor will be treated as having sold the property in exchange for payments that are contingent on the productively, use or disposition of such property. These imputed or constructive royalty payments must reasonably reflect the amounts that would have been received annually in the form of such payments over the useful life of such property. See IRC Section 367(d)(2)(A)(ii)(I). Under the regulations, the transferor must continue to recognize the constructive royalties over the useful life of the intangible, but not in excess of 20 years. See Temp. Reg. Section 1.367(d)-1T(c)(3). These deemed royalty payments are payments that are treated as ordinary income to the U.S. transferor. See IRC Section 367(d)(2)(C); Temp Reg. Section 1.367(d)-1T(c)(1).

If the CFC at issue received a transfer of intangible property under the rules promulgated in Section 367(d), the CFC shareholder must check “yes” for Line 9a. If the filer answered “Yes” to question 9a, the filer must enter the amount of earnings and profits reduction pursuant to Section 367(d)(2)(B) for the tax year.

If the CFC shareholder answered “yes” for Line 9a, the filer must enter an “amount of the earnings and profits reduction pursuant to Section 367(d)(2)(B) for the taxable year.”  In cases where the useful life of the transferred property is indefinite or is reasonably anticipated to exceed twenty years, taxpayers may, in lieu of including amounts during the useful life of the intangible property, choose in the year of transfer to increase annual inclusions during the 20-year period beginning with the first year in which the transferor takes into account income pursuant to Section 367(d).

Below, please see an example in Illustration 1 which demonstrates valuing the earnings and profits indefinite property pursuant to Section 367(d)(2)(B).

Illustration 1.

Property subject to Section 367(d) is transferred from USP, a domestic corporation, to FA, a foreign corporation wholly owned by USP. The useful life of the transferred property, inclusive of derivative works, at the time of transfer is indefinite but is reasonably anticipated to exceed 20 years. In the first five years following the transfer, sales related to the property are expected to be $100x, $130X, $160x, $180x, and $187.2x, respectively. Thereafter, for the remainder of the property’s useful life, operating profits are expected to grow by four percent annually. It is determined that the appropriate discount rate for sales and operating profits is 10 percent. The present value of operating profits through the property’s indefinite useful life is $185x. The present value of sales through the property’s indefinite useful life is $2698x. Accordingly, the sales based royalty rate during the property’s useful life is 6.8 percent ($185x/$2698x). The taxpayer may choose to take income inclusions into account over a 20-year period. The 20-year period is $1787x. Accordingly, the sales based royalty rate under the 20-year option is increased to 10.3 percent ($185x/$1787x).

It should be noted that not all transfers of intangible property are subject to the “earnings and profits reduction” discussed in Section 367(d)(2)(B). Under certain circumstances, a U.S. transferor may prefer having the transfer of the intangibles to the foreign corporation taxed entirely at the time of transfer as a taxable sale of the intangible for its fair market value at a fixed price, rather than taxed as royalties over the life of the intangible (which may increase over time under the “commensurate with income” standard). The regulations permit a transfer to a CFC to elect to treat the transfer of the intangible as a sale at its fair market value if certain requirements are met. If this election is made, the transferor includes as ordinary income in the year of the transfer the difference between the fair market value of the intangible on the date of transfer and its adjusted basis. See Temp. Reg. Section 1.367(d)-1T(g)(2).

The regulations permit a taxpayer to make this deemed sale election in three situations. First, the taxpayer may elect if the intangible is an operating intangible. An operating intangible is an intangible of a type not normally licensed or transferred in transactions between unrelated parties for consideration contingent on use of the intangible. Second, the taxpayer may elect deemed sale treatment if the transfer is legally required by the government in the country of incorporation of the transferee corporation or is compelled by a genuine threat of immediate expropriation by such government. See Temp Reg. Section 1.367(d)-1T(g)(2)(ii).

Third, the taxpayer may elect deemed sale treatment if:

1. The taxpayer transferred the intangible to the foreign corporation within three months of the organization of that corporation as part of the original plan of capitalization of the corporation.

2. Immediately after the transfer of the intangible, the taxpayer owns at least 40 percent and not more than 60 percent of the total voting power and total value of the transferee foreign corporation’s stock.

3. Immediately after the transfer of the intangible, foreign persons unrelated to the U.S. transferor own at least 40 percent of the total voting power and total value of the transferee corporation’s stock.

4. Intangibles constitute at least 50 percent of the fair market value of property transferred by the U.S. person to the foreign corporation’s stock.

5. The transferred intangible will be used in the active conduct of a trade or business outside the United States and will not be used for the manufacture or sale of products in or for use or consumption in the United States.

The filer should check “yes” in the box for Line 9a if the foreign corporation is required to report Section 367(d) annual income.

For Line 9b, the filer should disclose in functional currency the amount of earnings and profits reduction pursuant to Section 367(d)(2)(B). Section 367(d)(2)(B) of the Internal Revenue Code reduces the earnings and profits of a foreign corporation when a U.S. person transfers intangible property to it. This reduction is required to match the U.S. transferor included in its income under a Section 367(d) inclusion.

Line 10.

Line 10 asks if during the tax year if the foreign corporation was an expatriating foreign subsidiary under Treasury Regulation Section 1.7874-12(a)(9).

An expatriated entity is a domestic corporation or partnership with respect to which a foreign corporation is a “surrogate foreign corporation” and any U.S. person who is related to such a domestic corporation or partnership. A surrogate foreign corporation is a foreign corporation if, pursuant to a plan or series of transactions, the entity completes the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation or substantially all of the properties constituting a trade or business of a domestic partnership, after at least 60 percent of the stock (by vote or value) of the entity held in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation, or in the case of an acquisition with respect to a domestic partnership, by former partners of the domestic partnership by reason of holding a capital or profits interest in the domestic partnership, and after the acquisition the expanded affiliated group which includes the entity does not have substantial business activities in the foreign country in which, or under the law of which, the entity is created or organized, when compared to the total business activities of such expanded affiliated group.

Line 10 asks the filer to answer “yes” or “no” as to whether or not the CFC was an expatriated foreign subsidiary under Treasury Regulation Section 1.7874-12(a)(9). If the filer answers “yes,” a statement providing the name and EIN of the domestic corporation or partnership defined in Regulation Section 1.7874-12(a)(6) and the relationship of the foreign corporation to the domestic corporation or partnership must be attached to the return.

The filer should check “yes” in the Line 10 box if the foreign corporation was an expatriating foreign subsidiary as defined by Treasury Regulation Section 1.7874-12(a)(19).

Line 11.

Did the foreign corporation participate in a reportable transaction defined in Regulation Section 1.6011-4.

Under Treasury Regulation Section 1.6011-4, taxpayers that have participated in reportable transactions must disclose them on Form 8886, Reportable Transaction Disclosure Statement. In addition, CFCs that participated in a reportable transaction must check “yes” for Line 11 of Schedule G.

There are five types of reportable transactions.

1. Listed transactions. A listed transaction is a transaction that is the same or substantially similar to the ones that the IRS has determined to be for a tax-avoidance purpose.

2. Confidential transactions. A confidential transaction is offered to a taxpayer by an advisor under conditions of confidentiality and for which the taxpayer has paid the adviser at least a minimum amount prescribed in Treasury Regulation Section 1.6011-4(b)(3).

3. Transactions with contractual protection. A transaction with contractual protection is one for which the taxpayer or related party (as stated in Section 267(b) or 707(b)) has the right to a full or partial refund of fees if all or part of the intended tax consequences from the transaction is not sustained.

4. Loss transactions. In a loss transaction, the taxpayer reports a loss under Section 165 that exceeds the thresholds stated in Treasury Regulation Section 1.6011-4(b)(5).

5. Transactions of interest. A transaction of interest is the same as or substantially similar to the ones that the IRS has identified as transactions of interest in a notice, regulation, or other form of published guidance.

The filer should check “yes” in the Line 11 box if the foreign corporation participated in reportable transactions defined in Regulation Section 1.6011-4.

Line 12.

Line 12 asks the filer to state whether the foreign corporation paid or accrued any foreign tax that was disqualified for credit under Internal Revenue Code Section 901(m).

Internal Revenue Code Section 901(m) (as was Internal Revenue Code Section 909) was enacted as part of a series of foreign tax credit changes in 2010. It was brought into the Internal Revenue Code Section to prevent the step-up in basis in certain acquisition transactions (“covered asset acquisitions”) from increasing foreign tax credit. The remedy where Section 901(m) applies is to disallow permanently a portion of the foreign income taxes imposed with respect to the assets that were acquired in the covered asset acquisition (“CAA”). The disqualified portion of the taxes is intended to cause the allowable foreign tax credit, as a fraction of the foreign payor’s taxable income or E&P, to result in a lower effective foreign tax rate for foreign tax credit purposes.

On March 20, 2020, the Treasury Department published final regulations providing guidance on determining the credibility of foreign taxes following CAAs under Internal Revenue Code Section 901(m). The Final Regulations include categories of transactions that are treated as CAAs, in addition to those contained in the proposed regulations. These new categories are:

1) Any transaction that is treated as (A) an asset acquisition for US income tax purposes and (B) an acquisition of an interest in a fiscally transparent entity for foreign income tax purposes.

2) Any transaction that is treated for US income tax purposes as an asset distribution from a partnership and causes an increase in the basis of either the distributed assets or the remaining partnership assets.

3) Any transaction treated as an asset acquisition for both US and foreign income tax purposes.

The second and third categories apply only if the US tax basis increases without a corresponding increase to foreign tax basis.

If the CFC had any foreign tax credits disallowed under Section 901(m), the CFC shareholder must state “yes” for Line 12.

Line 13.

Line 13 asks the filer if the CFC paid or accrued foreign taxes which Section 909 applied and the taxes are no longer suspended.

Internal Revenue Code Section 909 provides that a foreign tax splitting event cannot be taken into account for income tax purposes before the taxable year in which the taxpayer takes the related income into account. In Notice 2010-92, the IRS issued its guidance on internal Revenue Code Section 909. Specifically, Notice 2010-92 addresses the application of Section 909. The notice refers to foreign taxes paid or accrued by a Section 902 corporation in pre-2011 taxable years as “pre-2011 taxes.”
Notice 2010-92 states that, unless otherwise provided, the guidance prescribes only to pre-2011 taxes and not to foreign income taxes paid or accrued in post-2010 taxable years. As noted, Notice 2010-92 provides a list of pre-2011 splitter arrangements. Per Section 4 of the notice, the list is “an exclusive list of such arrangements that will be treated as giving rise to foreign tax credit splitting events for purposes of applying Section 909 to pre-2011 taxes.” The arrangements identified as pre-2011 splitter arrangements are:

1. Reverse hybrid structures.

2. Certain foreign consolidated groups.

3. Group relief and other loss-sharing regimes; and

4. Hybrid instruments.

If the CFC accrued or paid a foreign tax that was suspended and are no longer suspended under Section 909, the CFC shareholder should answer “yes” for Line 13.

Line 14.

If the filer answered “yes” to Line 14, the CFC shareholder must enter the appropriate Corresponding Code(s) for the Schedule G table.

Line 15.

Line 15 asks the filer if the foreign corporation had any interest expenses disallowed under Internal Revenue Code Section 163(j).

Internal Revenue Code Section 163(j)  operates to prevent U.S. companies from eroding the federal income tax base through tax deductible interest payments to tax exempt related parties. Historically, the rule applied when a debtor’s debt-to-equity ratio 1.5 to 1 and its total “net interest expense” exceeded 50 percent of its “adjusted taxable income,” there would result in disallowance of a portion of its “related party tax-exempt interest.” Disallowed interest could be carried forward.

The 2017 Tax Cuts and Jobs Act modified Internal Revenue Code Section 163(j) interest expense provisions in several key ways, most notably eliminating the 1.5 to 1 ratio requirements. The new interest limitation rules under Section 163(j) provides that the deduction allowed for business interest expense in any taxable year generally cannot exceed the sum of 1) the taxpayer’s “business interest income” for the taxable year, plus 2) 30 percent of the taxpayer’s “adjusted taxable income” for the taxable year. The term “business interest income” is defined to mean the amount of interest includible in gross income that is allocable to a trade or business, which does not include investment income. If the foreign corporation had disallowed interest under Section 163(j), the filer must answer “yes” on Line 15.

Line 16.

Line 16 requires the filer to state the amount of interest expenses previously disallowed under Section 163(j).

Line 17a.

Line 17a asks the filer if the foreign corporation had any extraordinary reduction with respect to a controlling Section 245A shareholder that occurred during the tax year.

An extraordinary reduction occurs when a controlling Section 245A shareholder (typically a U.S. corporate shareholder that owns more than 50% of the stock of the CFC) transfers more than 10% of its stock in a CFC or there is a greater than 10% dilution in the controlling Section 245A shareholder’s overall ownership of the CFC. If such a reduction in ownership took place, the filer should check “yes” in the box for Line 17a.

Line 17b.

Line 17b asks if a special election was made to close the tax year so that no amount will be treated as an extraordinary reduction amount or tiered extraordinary reduction amount.

The regulations promulgated under Section 245A deny deductions for dividends paid in a year in which an extraordinary reduction occurs. The regulations provide an election for extraordinary reductions under which 1) the relevant CFC’s tax year closes as of the extraordinary reduction’s end date; and 2) the extraordinary reduction amount equals zero. The election may permit a CFC to convert dividend income that is fully taxable by reason of the extraordinary reduction rule into GILTI or subpart F income thus permitting foreign tax credit reduction and a Section 250 deduction. If a special election was made at the close of the tax year so that no amount will be treated as an extraordinary reduction amount or tiered extraordinary reduction amount, the filer should check “yes” in the box for Line 17b.

Line 18a.

Line 18a asks if the foreign corporation had any loans to or from the foreign corporation to which the safe-haven rate rules of Treasury Regulation Section 1.482(a)(2)(iii)(B) are applicable, and for which the filer used an interest rate within the relevant safe-haven range of 100% to 130% of the AFR for the relevant term. If the foreign corporation had a loan for which the sage harbor rules apply, the filer should check “yes” in the box for Line 18a.

Line 18b.

Line 18b if the foreign corporation had any loans to or from the foreign corporation to which the safe-haven rate rules of Treasury Regulation Section 1.482(a)(2)(iii)(B) are applicable, and for which the filer used an interest rate outside the relevant safe-haven range of 100% to 130% of the AFR for the relevant term. If the foreign corporation had a loan for which the sage harbor rules apply, the filer should check “yes” in the box for Line 18b.

Line 19a.

Line 19a asks if the filer issued a covered debt instrument in any transaction described in Treasury Regulation 1.385-3(b).

For Line 19a, the filer should check the “yes” box if the foreign corporation issued a covered debt instrument in any of the transactions described in Treasury Regulation Section 1.385-3(b)(2) during its tax year. A covered debt instrument is a debt that is backed by a pool of assets. The filer should also check the “yes” box if the foreign corporation issued or refinanced indebtedness owed to a foreign corporation during 36 months before or after the date of a distribution or acquisition described in Treasury Regulation 1.385-3(b)(3)(i) made by the CFC and either the issuance or refinance of indebtedness or the distribution or acquisition occurred during the tax year.

Line 19b.

If the answer to Line 19b was “yes,” the filer must provide the total amount of the transactions described in Treasury Regulations Section 1.385-3(b)(2) (as measured by the fair market value of the distribution or, as the case may be, the property exchanged for the debt instrument) and of the distributions and/or acquisitions described in Treasury Regulation 1.385-3(b)(3)(i) as measured by the fair market value of the property distributed and or acquired.

The filer should provide the total amount (as measured by issue price in the case of an instrument treated as stock upon issuance, or adjusted issue price in the case of an instrument deemed exchanged for stock) of the debt instrument issuance addressed by Line 19a. The adjusted issue price of a debt instrument is the issue price previously includible in gross income or any holder and decreased by the payments other than payments of stated interest.

Line 20a and line 20b.

Lines 20a and 20b asks if the foreign corporation paid or accrued any Top-up Tax.

Certain foreign countries have enacted legislation to implement the GloBE Model Rules for the Qualified Domestic Minimum Top-up Tax (QDMITT), Income Inclusion Rule (IIR), and UTPR. The amount of Top-up Tax is determined by multiplying the To-up Tax Percentage (the positive excess of 15% over the RTR in the jurisdiction) by the Excess Profits (the positive amount of the Net GloBE Income in such jurisdiction that exceeds a Substance-based Income Exclusion). If the foreign corporation paid or accrued any Top-up Tax during the tax year, the filer should check the “yes” box for Question 20a. The amount of tax should be stated in Line 20b.

Conclusion

The IRS Form 5471 is an incredibly complicated return. Each year an international tax attorney should review direct, indirect, and constructive ownership of the reporting CFC to determine the impact of any changes in percentages, filer categories, and CFC status. Workpapers should also be prepared and maintained for each U.S. GAAP adjustment and foreign exchange. In addition, an accounting should be made for adjustments to prior and current year previously taxed E&P that become PTEPs on Schedule J, E-1, and P.

Anthony Diosdi is one of several tax attorneys and international tax attorneys at Diosdi & Liu, LLP. Anthony focuses his practice on domestic and international tax planning for multinational companies, closely held businesses, and individuals. Anthony has written numerous articles on international tax planning and frequently provides continuing educational programs to tax professionals.

Anthony has assisted companies with a number of international tax issues, including Subpart F, GILTI, and FDII planning, foreign tax credit planning, and tax-efficient cash repatriation strategies. Anthony also regularly advises foreign individuals on tax efficient mechanisms for doing business in the United States, investing in U.S. real estate, and pre-immigration planning. Anthony is a member of the California and Florida bars. He can be reached at 415-318-3990 or [email protected].

This article is not legal or tax advice. If you are in need of legal or tax advice, you should immediately consult a licensed attorney.