Subpart F Expansion After Tax Reform: Increased Tax Liability and Reporting Obligations

The changes brought about in the 2017 tax reform law continue to reverberate in the area of information reporting and tax liability attributable to foreign subsidiary assets and activities. With the new GILTI provisions and transition tax on specific offshore holdings, as well as changes to the determination of foreign subsidiaries subject to these provisions, the law expands the reach of the historic Subpart F regime, and taxpayers and advisers alike are still coming to grips with the increased planning issues and reporting duties.

The Subpart F rules require "U.S. shareholders" of CFCs to treat certain types of income as taxable in the current year. These calculations have long presented significant challenges to tax advisers serving clients with CFC holdings.

The new law adds additional complexity to an already challenging regime. The changes caused an increase in the number of foreign corporations treated as CFCs subject to reporting and tax requirements, as well as the amount of income liable to current U.S. taxation. Tax advisers must also know whether the new rules create new filing obligations to avoid severe penalties for foreign information reporting noncompliance.

Listen as our authoritative panel of international tax practitioners reviews the Subpart F rules and provides a practical guide to the specific changes the 2017 tax law makes to determining CFC ownership and reporting obligations.

1. Existing Subpart F framework
   1. Identify the definition of a CFC
   2. "U.S. shareholder"
   3. Income inclusions and rates
   4. Allowable exclusions
2. Expansion of Subpart F in the new tax reform law
   1. Expanded definition of a CFC and U.S. shareholder
   2. The additional income included in the calculation base
   3. Disparate treatment between corporate shareholders and individual shareholders of CFCs
   4. Downward attribution rules
3. Section 951A GILTI current tax
   1. Overview
   2. Key updates from regulations
   3. Proposed high tax exclusion
   4. Interaction with Section 956
4. Identifying new Form 5471 reporting obligations

The panel will discuss these and other important topics:

• How the 2017 tax law's expansion of the definitions of CFCs and U.S. shareholders will create new tax and reporting obligations for U.S. taxpayers previously exempt from filing duties
• Constructive ownership tests in CFCs after the new downward attribution rules
• How the Subpart F changes run counter to the tax law's general aim to convert to more territorial taxation of U.S. taxpayers as opposed to global-based
• Treatment of earnings invested in U.S. property

Learning Objectives

After completing this course, you will be able to:

• Determine how the definition of U.S. shareholders subject to tax on previously deferred foreign-source income has changed under the new law
• Identify the repatriation provisions effective in 2018
• Distinguish the tax provisions under Subpart F from the GILTI provisions
• Recognize the treatment of foreign tax credits starting in 2018
• Establish the impact that the ending of the prior deferral benefit laws for U.S. shareholders of foreign business entities has on taxpayers
• Ascertain whether income is Subpart F income and the tax consequences if income is classified as Subpart F income
• Decide the best way to repatriate income and to pay taxes on the repatriation of foreign untaxed earnings

• 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 the organization, preparing complex tax forms and schedules. Specific knowledge and understanding of international taxation, deferred foreign-source income, earnings and profits, controlled foreign corporations, specified foreign corporations, and repatriation of deferred foreign earnings; familiarity with accumulated cash and non-cash retained earnings and profits and netting of earnings and profits positions

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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).