The New CFC Attribution Rules and How These Rules Can Cause Domestic Investors to be Classified as “SFC” Shareholders
By Anthony Diosdi A foreign corporation is a controlled foreign corporation (“CFC”) if more than 50% of the total combined voting power of all classes of such corporation entitled to vote, or of the total value of the stock of such corporation, is owned within the meaning of Internal Revenue Code Section 958(a) or Internal Revenue Code Section 958(b). Prior to the enactment of the 2017 Tax Cuts and Jobs Act, for purposes of subpart F income, a “U.S. Shareholder” only included a U.S. person who owns or is considered as owning 10% or more of the total combined voting power of all classes of stock entitled to vote of the foreign corporation, with attribution rules applying. The Tax Cuts and Jobs Act expanded the definition of a U.S. Shareholder”…