Is a personal holding company a corporation?
A personal holding company (PHC) is a C corporation in which more than 50% of the value of its outstanding stock is owned (directly or indirectly) by five or fewer individuals and which receives at least 60% of its adjusted ordinary gross income from passive sources.
What is excluded from foreign personal holding company income?
Foreign personal holding company income shall not include rents or royalties that are derived in the active conduct of a trade or business and received from a person that is not a related person (as defined in section 954(d)(3)) with respect to the controlled foreign corporation.
What is foreign personal holding income?
Foreign personal holding company income (FPHCI) is defined for U.S. controlled foreign corporation rules and, with modifications, for U.S. foreign tax credit rules. It consists of interest, dividends, rents, royalties, gains on property producing FPHCI, and certain other items.
Can you own a foreign company?
However, you can own a foreign corporation and live in the US and still enjoy benefits such as asset protection, access to foreign banks to store your money or to hold other currencies, and ownership of a business in another country that allows you to use tax treaties or foreign tax credits to offset your US tax based …
Can a personal holding company be an S Corp?
The PHC rules do not apply to S corporations. However, a C corporation that makes the S election is still subject to the PHC rules for the years in which it was a C corporation.
Can a holding company be an S Corp?
In the S corporation holding company structure, a newly formed corporation becomes the holding company. The S election for the existing S corporation continues for the newly formed corporation. The original S corporation becomes a wholly owned subsidiary of the newly formed corporation.
What is a personal holding company for IRS?
A corporation will be considered a personal holding company if it meets both the Income Test and the Stock Ownership Test. The Income Test states that at least 60% of the corporation’s adjusted ordinary gross income for the tax year is from certain dividends, interest, rent, royalties, and annuities.
Is foreign personal holding company income Subpart F?
FPHCI is a category of foreign base company income under subpart F income. FPHCI generally includes passive types of income such as interest, dividends, rents, royalties and sales of property held for investment.
What is look through rule?
THE LOOK-THROUGH RULE: PROTECTING AN INTERNATIONAL SHELL GAME. The CFC Look-Through Rule allows companies to dodge taxes on Subpart F income by removing their obligation to report the transactions that create it.
What is foreign base company income?
(1) In generalFor purposes of subsection (a)(2), the term “foreign base company sales income” means income (whether in the form of profits, commissions, fees, or otherwise) derived in connection with the purchase of personal property from a related person and its sale to any person, the sale of personal property to any …
What is foreign base company services income?
Except as provided in paragraph (d) of this section, foreign base company services income means income of a controlled foreign corporation, whether in the form of compensation, commissions, fees, or otherwise, derived in connection with the performance of technical, managerial, engineering, architectural, scientific, …
What is the high tax exception?
Definition of high tax – The GILTI high tax exception applies only if the CFC’s effective foreign rate on GILTI gross tested income exceeds 18.9% (i.e., more than 90% of the U.S. corporate income tax rate of 21%) and the U.S. shareholder elects for that year to exclude the high-taxed income.