Section 959 PTEP Categories and Ordering Rules for Controlled Foreign Corporation Distributions

PTEP presents unique issues and complexity for U.S. shareholders of CFCs. Section 959 and its related guidance can significantly alter the federal tax implications to CFC distributions. Treasury acknowledges PTEP as "complex rules with administrative and compliance challenges."

Treasury issued Notice 2019-1, which announced Treasury's intent to issue regulations addressing certain issues arising from the TCJA with respect to foreign corporations with PTEP. The Notice provides that forthcoming regulations will provide that annual PTEP accounts must be maintained and each annual PTEP account should be segregated into different groups as detailed in the Notice.

The forthcoming regulations are expected to apply to taxable years of U.S. shareholders ending after December 14, 2018 and to taxable years of foreign corporations ending with or within such taxable years of U.S. shareholders. U.S. shareholders may rely on the guidance provided in the Notice pending issuance of regulations provided certain conditions are satisfied.

Listen as our authoritative panel of international tax practitioners reviews the guidance provided in Notice 2019-01.

1. Summary of previously taxed income rules before Notice 2019-01
2. Elements of Section 959
   1. Section 959(a) exclusion from gross income of U.S. persons
   2. Section 959(b) exclusion from gross income of certain foreign subsidiaries
   3. Section 959(c) allocation of distributions
3. Groups of PTEP from Notice 2019-01 requiring a separate annual accounting
4. Ordering rules for distributions to U.S. shareholders from CFCs

The panel will discuss these and other relevant issues:

• New PTEP groups discussed in Notice 2019-1
• Rules for separate accounting of each PTEP group
• Federal tax implications when PTEP distributions exceed current year E&P

Learning Objectives

After completing this course, you will be able to:

• Identify the exclusions from gross income listed in Section 959
• List the PTEP groups requiring separate annual accounting described in Notice 2019-1
• Describe the tax implications where PTEP exceeds E&P
• Recognize the exceptions to the general "last in, first out" treatment for distributions of PTEP

• 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 professional experience at mid-level within a tax or accounting organization, preparing complex tax forms and schedules, such as Form 1116. Specific knowledge and understanding of international taxation, foreign source income, deferred foreign source income, controlled foreign corporations, specified foreign corporations, repatriation of deferred foreign earnings, and treatment of foreign-sourced income received by U.S. taxpayers, familiarity with cash and non-cash retained earnings and profits and global intangible low-tax income (GILTI).

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

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