What does Subpart F income include?
Sec. 952 of the Code defines Subpart F income to include the following items: insurance income, foreign base company income (FBCI), international boycott factor income, illegal bribes and kickbacks, and income derived from certain designated terrorism-sponsoring countries.
How do you calculate Subpart F?
A CFC calculates subpart F income by adding its adjusted net foreign base company income to its adjusted net insurance income. The two main components of subpart F income, adjusted net foreign base company income and adjusted net insurance income, are determined under specific rules and a multi-step process.
Is subpart F income a permanent or temporary difference?
Therefore, a temporary difference exists for deferred subpart F income as it would for other deferred taxable income.
What is the de minimis rule for Subpart F income?
De minimis is defined as annual Subpart F income that is the lesser of 5% of gross income of the CFC or $1 million. Alternatively, there is a full inclusion rule for Subpart F income that requires 100% inclusion if the sum of the annual CFC’s Subpart F income exceeds 70% of total gross income of the CFC.
What is subpart F income and how is it taxed?
Essentially, Subpart F Income involves CFCs (Controlled Foreign Corporations) that accumulate certain specific types of income (primarily passive income). When a CFC has Subpart F income under IRC Section 952, that means the U.S. shareholders may have to pay tax on the earnings.
Is income under Subpart F taxable?
Is subpart F income a dividend?
Note that the Subpart F inclusion is not a dividend and consequently does not qualify for the lower rate of tax under I.R.C. § 1(h)(11).
Is interest income subpart F income?
As such, the provisions of Subpart F require a U.S. shareholder to include its pro-rata share of the CFC’s FPHCI in income currently. FPHCI generally includes a CFC’s income from dividends, interest, annuities, rents, royalties, and net gains on dispositions of property, and many more.
What is subpart F income on Form 5471?
Subpart F Income is the income of a controlled foreign corporation (CFC) on any day during the tax year. A CFC is a foreign corporation in which U.S. persons own more than 50% of the corporation’s stock.