OBBBA: Stock Attribution, Restoration of Section 958(b)(4), and Section 951B, a New Anti-Deferral Regime

The One Big Beautiful Bill Act (OBBBA) reinstated, with modifications, Section 958(b)(4), which previously prevented downward attribution of stock owned by foreign persons to U.S. persons. Simultaneously, it introduced Section 951B—a new anti-deferral regime that extends Controlled Foreign Corporation (CFC)-like inclusion rules, with certain modifications, to “foreign-controlled United States shareholders” (FCUSS) of “foreign-controlled foreign corporations” (FCFCs), even if these entities do not meet the traditional definition of a CFC.

U.S. persons subject to Section 951B must comply with a parallel set of rules similar to those governing traditional CFCs. This includes information reporting (e.g., Form 5471) and income inclusion requirements, with specific adjustments for the foreign-controlled context.

Listen as our panel of international tax advisers walks through the recent changes introduced by OBBBA, focusing on downward attribution rules and the resulting compliance and reporting requirements.

1. Introduction: Downward attribution rules and Section 951B
2. Background and the practical impact of Section 958(b)(4) Repeal
3. Downward attribution under TCJA
4. Compliance challenges, Treasury guidance, and safe harbors
5. Restoration of the limitation of downward attribution
6. Impact on CFC determination and related tax provisions
7. Section 951B as a parallel anti-deferral regime
8. Definition and scope of Foreign-Controlled U.S. Shareholder (FCUSS)
9. Definition and scope of Foreign-Controlled Foreign Corporation (FCFC)
10. Structures potentially affected by Section 951B
11. Income inclusions under Section 951B
12. Interaction with other tax provisions
13. Compliance and reporting requirements
14. Transition issues and areas needing Treasury guidance
15. Planning ahead: Strategic considerations

The panel will address key issues, including:

• Examples and illustrative scenarios
• Assessing the impact of restored downward attribution rules on U.S. persons
• Identifying FCFCs and evaluating their implications
• Understanding Section 951B as a parallel regime
• Scoping the potential impact on U.S. persons with foreign investments
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Learning Objectives

After completing this course, you will be able to:

• Identify foreign-controlled foreign corporations (FCFCs)
• Determine which U.S. persons are foreign-controlled U.S. shareholders (FCUSS)
• Decide how downward attribution determinations are impacted by new Section 951B
• Ascertain how the restoration of Section 958(b)(4) impacts CFC taxation

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of international taxation including residency determination, foreign entity classifications, application of treaty benefits, as well as GILTI, Subpart F, and the related Section 250 deductions.

  
  

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IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).