Check-the-Box Elections for Foreign Subsidiaries: Achieving Optimal Tax Treatment Through Entity Selection

Using Hybrid Entities for Tax Arbitrage, Structuring Entities to Enable Deferral of Foreign Profits

Recording of a 110-minute CPE webinar with Q&A

Conducted on Thursday, October 20, 2016

Recorded event now available

or call 1-800-926-7926
Course Materials

This course will provide tax advisers with thorough and practical guidance on the advantages and pitfalls of utilizing the “check the box” election for foreign subsidiaries. The panel will discuss the various tax impacts to specific elections, outlining the tax timing and tax treatment, both deferred and on repatriation, of income from foreign subsidiaries.


The Section 7701 “check-the-box” provisions for entity selection are one of the most powerful tax planning tools available to U.S. taxpayers conducting operations outside the United States. For taxpayers with foreign activities, the ability to create an entity structure to minimize or defer taxes has been an integral component of cross-border tax strategies. While the regulations provide great flexibility for U.S. taxpayers engaging in foreign business, tax advisers must know the practical aspects of the rules to maximize the tax benefits.

Section 7701 provides default classification rules for eligible entities, but allows the entity to determine how it is classified for U.S. tax purposes. A foreign entity subject to U.S. tax must make its initial election when it becomes “relevant.” A foreign entity becomes relevant when the entity impacts the U.S. tax liability of any person for either payment or informational return purposes.

One of the most significant benefits created by the check-the-box rules is the ability of U.S. multinationals to engage in cross-border tax arbitrage through the creation of “hybrid entities,” entity forms that are treated one way in a foreign jurisdiction and another by the United States. By managing the entity status of various foreign holdings, U.S. multinationals can achieve significant tax advantages.

Listen as our experienced panel provides thorough and practical guidance to the check-the-box regulations of Section 7701.



  1. Purpose of “check-the-box” entity election
  2. Relevance determination for foreign entities
  3. Hybrid entities and tax planning opportunities
  4. Income transfer opportunities out of Subpart F
  5. Planning tax analysis for initial entity selection
  6. Making retroactive entity selection or reevaluation


The panel will discuss these and other important issues:

  • How do check-the-box elections facilitate the creation of “hybrid” entities?
  • Utilizing check-the-box elections to structure transactions to pull foreign-source income out of Subpart F treatment
  • Retroactive entity selection and completing Form 8832
  • How to determine whether a foreign entity is “relevant” for U.S. taxation purposes


Henson, William
William Henson

Plante Moran

Mr. Henson has more than 23 years of experience working in both public accounting and industry. He specializes in...  |  Read More

Dougherty, Alison
Alison N. Dougherty, J.D., LL.M.

Senior Manager

Ms. Dougherty has extensive experience assisting clients with U.S. tax reporting and compliance for offshore assets and...  |  Read More

Pamela A. Fuller, JD, LLM
Pamela A. Fuller, JD, LLM

Gremminger Law Firm

Ms. Fuller has broad experience in federal, state, and international tax planning matters. She counsels foreign and...  |  Read More

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