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Subpart F vs. GILTI: CFC Anti-Deferral Issues

CFC Anti-Deferral Issues

Note: CLE credit is not offered on this program

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

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Conducted on Wednesday, June 14, 2023

Recorded event now available

or call 1-800-926-7926

This course will provide a practical overview of the controlled foreign corporation (CFC) anti-deferral rules including the 2022 Section 958 final regulations that provide rules with respect to domestic partnerships and their partners. The panel will also discuss some key issues with respect to the repeal of Section 958(b)(4) and the downward attribution rules that can create unexpected CFC status.


As part of the Tax Cuts and Jobs Act (TCJA), Section 958(b)(4) was repealed. The repeal of Section 958(b)(4) modified the rules for determining U.S. shareholder and CFC status and thus, increased the number of foreign subsidiaries subject to the CFC anti-deferral provisions.

The Subpart F rules generally require U.S. shareholders of CFCs to currently include into gross income certain types of CFC income even where no cash or property was otherwise distributed. Included as part of the TCJA, Section 951A, global intangible low-taxed income (GILTI), added additional rules and complexity which can subject U.S. shareholders of CFCs to current tax.

The 2022 Section 958 final regulations (T.D. 9960) modified how domestic partnerships and their partners recognize income under the CFC anti-deferral rules. These changes can substantially alter which shareholders include income under CFC anti-deferral rules and how such income is reported on tax filings. Application of the 2022 Section 958 final regulations can also have certain unintended consequences under the passive foreign investment company (PFIC) rules.

Listen as our authoritative panel of international tax practitioners review the CFC anti-deferral rules, detail the downward attributions rules that create unexpected CFC status, explain the treatment of domestic partnerships and their partners, and provide a practical guide to determine CFC ownership, tax, and reporting obligations.



  1. General overview of CFC rules
    1. Definition of CFC and U.S. shareholder
    2. Categories of Subpart F income
    3. GILTI overview
    4. GILTI high-tax exclusion
  2. Repeal of Section 958(b)(4) issues
    1. Implications to direct or indirect U.S. shareholders
    2. Implications to constructive U.S. shareholders
    3. Form 5471 filing requirements and exceptions
  3. Application of CFC anti-deferral rules to domestic partnerships and their partners
    1. Final section 958 regulations
    2. Proposed PFIC regulations


The panel will discuss these and other important topics:

  • Rules to determine how tested income is high taxed for purposes of the GILTI high tax exclusion
  • Compliance issues due to the repeal of section 958(b)(4)
  • Safe harbors for determining non-CFC status
  • PFIC issues that may arise to certain partners when a domestic partnership applies the 2022 Section 958 Final Regulations


Dokko, Sean
Sean Dokko, J.D., LL.M.

International Tax Partner
Citrin Cooperman

Mr. Dokko is a partner in Citrin Cooperman’s International Tax Practice and is based out of the New York office....  |  Read More

Waller, Brian
Brian Waller
Manager, International Tax Services
Citrin Cooperman


 |  Read More

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