Subpart F Income: Navigating the Revised Branch and Contract Manufacturing Rules

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

Conducted on Wednesday, June 20, 2012

Recorded event now available

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Program Materials

This teleconference will prepare corporate taxpayers and advisors to make informed decisions about taxability in situations involving foreign branch offices of a controlled foreign corporation or a contract manufacturing arrangement.


Branch rules and contract manufacturing represent two very critical, and complex, aspects of Subpart F on taxability of income generated by foreign subsidiaries of U.S. multi-nationals. In T.D. 9563, the IRS issued final regs on property sold by a controlled foreign corporation but made by a branch office.

Those rules govern whether a CFC earns foreign base company sales income if multiple branch offices are involved in production, purchasing or selling activities. Advisors and taxpayers must navigate the contract manufacturing regulations to ensure that an associated CFC is not immediately taxed by the U.S.

The federal government is strictly enforcing and policing foreign-source income. So, tax professionals must stay current on Subpart F guidance generally, and on the branch office and contract manufacturing rules particularly, to avoid unanticipated assessments and sudden shifts in an audit's direction.

Listen as our authoritative panel of tax advisors drills down on branch office and contract manufacturing regs and guidance, and offers experiences to help with the practical problems that taxpayers currently face.



  1. Branch rules
    1. Broad terms of Sect. 954(d)2
    2. Final rules in T.D. 9563
      1. Guidance on application of branch rule, particularly to CFC with multiple branches
      2. Does CFC earn foreign base company sales income if purchases, sales conducted by multiple branches?
      3. If production activities conducted by multiple branches?
      4. IRS to continue to study when branch is separate Sect. 954(d)(2) corporation
      5. IRS to study relationship between foreign base company sales, and service, income
  2. Contract manufacturing regulations
    1. Framework for ensuring income of CFC operating as principal in contract manufacturing structure is not taxable in U.S. under general FBCSI or branch rules
    2. "Substantial contribution" test for manufacturing exception
  3. Practical taxability decisions and reporting issues


The panel will address these and other relevant topics:

  • Material terms of the final branch office rules and associated IRS guidance.
  • Key aspects of the contract manufacturing regulations.
  • Practical decisions for taxpayers and advisors on taxability.
  • Critical reporting issues.

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.


Misey, Robert
Robert J. Misey, Jr.

Reinhart Boerner Van Deuren

Mr. Misey is attached to the firm's Tax and Business Law Practices, and chairs its International Practice. He...  |  Read More

James K. Sams
James K. Sams

Mr. Sams is attached to the firm's International Corporate Tax Services Practice, providing high-level technical...  |  Read More

Frederick Chilton
Frederick Chilton

McDermott Will & Emery

His practice focuses on complex international tax matters for high-technology companies and other corporate clients....  |  Read More

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