New Subpart F and PFIC Regulations for U.S. Investors and Domestic Funds

Calculating Subpart F and PFIC Inclusions, Partner-Level PFIC Elections, IRC Sec. 1248, CFC and PFIC Overlap Rules

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, June 22, 2022

Recorded event now available

or call 1-800-926-7926
Course Materials

This CLE/CPE course will provide tax counsel and advisers guidance on recently released final and proposed regulations for calculating Subpart F and passive foreign investment company (PFIC) inclusions. The panel will discuss key provisions of the final and proposed rules, the impact to U.S. investors who own interests in foreign corporations through domestic partnerships, changes to Subpart F inclusion rules, proposed partner-level PFIC elections, IRC Sec. 1248 treatment of domestic partnerships, controlled foreign corporation (CFC) and PFIC overlap rules, and other key issues.

Description

The Subpart F rules and PFIC regime imposes a set of U.S. tax rules among the most onerous in all of the Internal Revenue Code. Recently, the U.S. Treasury and IRS issued new final and proposed Subpart F and PFIC regulations significantly impacting the calculations of Subpart F and PFIC inclusions by U.S. investors who own interests in foreign corporations through domestic partnerships.

Pass-through entities are treated either as separate from their owners or as an aggregate of their owners under U.S. tax law. If separate entity treatment applies, the tax implications of items flow into the partnership and are determined at the partnership level and then allocated to the partners. If aggregate treatment applies, partners take into account pro rata shares of the affected tax item rather than a distributive share of the item. The new final regulations provide for aggregate treatment for GILTI, Subpart F, and Section 956 inclusions.

The PFIC rules expose U.S. taxpayers owning stock in PFICs to an ordinary income and accrued interest regime that is complicated and expensive. The new proposed regulations provide for (1) aggregate treatment for purposes of determining the controlling domestic shareholder; (2) adoption of an aggregate approach to inclusions; and (3) clarification of the application of the CFC overlap rule for domestic partnerships and pass-through entities.

Listen as our panel discusses key provisions of the final and proposed rules, the impact to U.S. investors who own interests in foreign corporations through domestic partnerships, changes to Subpart F inclusion rules, proposed partner-level PFIC elections, IRC Sec. 1248 treatment of domestic partnerships, CFC and PFIC overlap rules, and other key issues.

READ MORE

Outline

  1. Final Subpart F regulations
    1. Key components of Subpart F anti-deferral regime
    2. Determining Subpart F income
    3. Reporting Subpart F income on Form 5471
    4. Best practices for ensuring accurate reporting of Subpart F income
  2. Proposed PFIC regulations
    1. PFIC treatment, purging, and deemed distribution rules
    2. Reporting requirements and inclusions
  3. Main issues and pitfalls to avoid in reporting and preparing required tax forms

Benefits

The panel will review these and other key issues:

  • What are the tax compliance challenges for U.S. persons owning CFCs?
  • What are the key provisions and challenges of the final Subpart F and proposed PFIC rules?
  • What are the challenges in determining and calculating Subpart F and PFIC income?
  • What are the main issues and pitfalls to avoid in reporting and preparing the required tax forms?

Faculty

Daly, Catherine
Catherine Daly
Managing Director
Ernst & Young

Ms. Daly specializes in international taxation, particularly US tax reporting for large Wealth and Asset Management and...  |  Read More

Owsley, John
John C. Owsley
Senior Manager, International Tax and Transaction Services
Ernst & Young

Mr. Owsley has experience in advising companies with regard to their international tax issues. He works with companies...  |  Read More

Peng, Stephen
Stephen M. Peng
Managing Director
Ernst & Young

Prior to joining EY, Mr. Peng was a tax attorney at the IRS Office of Associate Chief Counsel (International) focused...  |  Read More

Access Anytime, Anywhere

Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

To find out which recorded format will provide the best CLE option, select your state:

CLE On-Demand Video

Download