Final Downward Attribution Ownership Regulations Did Not Eliminate “The Mistake”
Many international tax professionals believe that Congress made a blunder (“The Mistake”) when it repealed Sec. 954(b)(4) in the 2017 Tax Cuts and Jobs Act (TCJA). While intending to punish expatriated U.S companies, it actually brought foreign companies not controlled by U.S. shareholders into taxation, as well.
Even if the rule did not create more U.S. taxation in certain cases, it created substantial compliance burdens which result in a $10,000 penalty for each “new” foreign corporation that is now a controlled foreign corporation (CFC), as well as U.S. shareholders failing to file a Form 5417 with their tax returns. Both U.S. individuals and corporate taxpayers are affected by “The Mistake”.
Learn more about “The Mistake’s” resulting additional CFCs due to downward attribution of ownership regulations as well as additional tax implications in our international tax practice, Moore Doeren Mayhew’s, latest article.
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