Tax Perspectives: Taking a Look at Inbound and Foreign-to-Foreign Transfers

The label "inbound" is given to corporate reorganizations where property or securities are moved from a foreign jurisdiction to a U.S. jurisdiction. The major focus of this practice note, adapted from a chapter in Rhoades & Langer’s U.S. International Taxation and Tax Treaties, is on taxation of U.S. persons holding shares of a controlled foreign corporation (CFC). When a reorganization of a CFC occurs, the U.S. shareholders or the corporation will likely face some gain recognition. The amount recognized turns on the type of transaction in which the corporation engages. Each of the various types of reorganizations is reviewed in this practice note and the amount of gain is discussed.

Read now »

Related Content

• Controlled Foreign Corporations Tax Fundamentals
  Determine whether a corporation is a CFC by learning more about key Subpart F concepts like the definition of a U.S. shareholder, the definition of a U.S. person, the definition of ownership, and about categories of Subpart F income and filing requirements and penalties.
• Inbound Investment: Tax Consequences for Non-U.S. Investors Acquiring Stock or Debt Instruments of U.S. Issuers
  Examine the principal U.S. federal income tax consequences that non-U.S. investors in stock and securities of U.S. issuers should consider before making an investment. In particular, consider special tax issues like a withholding tax, taxation of capital gains, taxation of income “effectively connected” with a U.S. trade or business, and the Foreign Investment in Real Property Tax Act (FIRPTA) regime that taxes non-U.S. investors on investments in U.S. real estate.

• Check-the-Box Rules for Foreign Businesses
  Evaluate the various entity classification election rules that apply to foreign businesses and certain considerations involved in deciding whether to make an election that can alter the manner in which U.S. federal income tax laws apply to foreign businesses.

Practical Guidance Updates 
Featuring the latest updates from your Practical Guidance account.   

•  Tax Key Legal Developments Tracker (Federal)—keep up to date with key legal developments!
  • Business Entities. IRS and Treasury Department issue proposed regulations that would remove the associated property rule and similar rules from the existing regulations on the interest capitalization requirements for improvements to designated property. Interest Capitalization Requirements for Improvements to Designated Property, 89 Fed. Reg. 42404 (May 15, 2024).
  • Business Entities. IRS provides various prescribed rates for federal income tax purposes for June 2024, including the applicable federal interest rates, the adjusted applicable federal interest rates, the adjusted federal long-term rate, and the adjusted federal long-term tax-exempt rate. These rates are determined as prescribed by I.R.C. § 1274. Rev. Rul. 2024-12.
  • Business Entities. IRS provides a limited waiver of the addition to tax under R.C. § 6655for underpaying estimated corporate income tax to the extent any underpayment is attributable to a portion of a corporation's corporate alternative minimum tax (CAMT) liability. I.R.S. Notice 2024-33.
• Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts. 
• For related Practical Guidance content on important recent trends, please review these easy-to-use Resource Kits on a variety of emerging topics:

• • Generative Artificial Intelligence (AI) Resource Kit
  • Environmental, Social, and Governance (ESG) Resource Kit
  • Public Interest, Pro Bono, and Non-Profit Resource Kit

• Explore the Practical Guidance Journal Spring 2024 Edition, featuring guidance on protecting attorney-client privilege and work product in a generative AI world, using AI to manage the attorney client relationship, an overview of privacy regulations in the United States, and a primer on the new Corporate Transparency Act requirements.
• Learn about the 2000+ leading attorney authors contributing to our 26 practice areas in the Practical Guidance Author Center. Interested in becoming a Practical Guidance author? Click here for details. Practical Guidance is committed to amplifying diverse voices of attorneys across all differences, including gender and race.  
• Legal Developments provide the latest updates and analyses of emerging topics impacting your practice area. Visit the Legal Developments page to see the latest topics, which also include breaking legal news and related Practical Guidance content. 

• New and Recently Updated Practical Guidance Content
  • Conservation Easements, Donor Advised Funds, and Sponsoring Organizations: Governing Principles
  • Partnership Taxation: Partner Contributions under Code Section 721(a)
  • Partnership Taxation: Partnership Distributions under Code Section 731
  • Section 367(b) Proposed Regulations on Triangular Reorganizations and Inbound Nonrecognition Transactions
  • Proposed Regulations on Transfer of Clean Vehicle Credits Under I.R.C. Sections 25E and 30D
  • Proposed Regulations on Micro-Captive Listed Transactions and Micro-Captive Transactions of Interest
  • Private Letter Ruling Request (to IRS)

PRACTICAL GUIDANCE CUSTOMER EMAIL EDITION ON THE WEB

Experience results today with practical guidance, legal research, and data-driven insights—all in one place.

Experience Lexis+