OBBBA: New Section 951B Downward Attribution Rules and the Restoration of Section 958(b)(4)

The OBBBA added Section 951B, expanding the reach of the anti-deferral regime to foreign controlled U.S. shareholders (FCUSS) of foreign-controlled foreign corporations (FCFCs). At the same time, Section 958(b)(4), which prevented downward attribution of stock owned by foreign investors to a U.S. person, has been reinstated. 

A FCUSS is a U.S. person owning more than 10% of the vote or value of a foreign corporation whose structure includes an FCFC.

A FCFC is a foreign corporation, other than a CFC, that is controlled by foreign persons owning more than 50% of the vote or value of a foreign corporation. 

These modifications under the OBBBA will subject more entities to Subpart F and GILTI inclusions. Along with CFC taxation, these entities could be subject to additional reporting requirements, including PFIC and Form 5471 reporting obligations.

Listen as our panel of international tax advisers walks you through the recent changes OBBBA made to downward attribution rules and the corresponding compliance and reporting requirements. 

I. New Section 951B and downward attribution rules: introduction

II. Downward attribution under TCJA

III. Foreign-controlled U.S. shareholders (FCUSS)

IV. Foreign-controlled foreign corporations (FCFCs)

V. CFC taxation under the OBBBA

VI. Reporting requirements

VII. Examples and illustrations

The panel will cover these and other critical issues:

• Identifying an FCFC
• Reporting obligations for U.S. persons under the OBBBA
• The impact of new Section 951 on U.S. taxpayers with foreign investments
• Examples and illustrations of downward application after the OBBBA

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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