~ Immigration Tax Planning ~
U.S. Anti-Deferral Regimes
Taxpayers are not required to continue that form of organization which results in the maximum tax. Raymond Pearson Motor Co. v. Commissioner, 246 F.2d 509.In the distant past, the general rule regarding the taxation of foreign corporations owned by U.S. shareholders was that the U.S. shareholder did not pay income tax on the corporation's income until that income was distributed to the shareholder as a dividend. This is often referred to as the deferral rule.
Over the past 30 years, Congress has enacted a series of rules which cut back on the application of the deferral rule. These rules apply in similar but not identical circumstances, and each imposes a different consequence, so in virtually every case it requires a careful analysis of each separate provision to determine the consequences of any particular structure. However, it is safe to say that without careful planning one or more of these anti-deferral provisions will almost certainly apply.
Click on any item in the lit below to get a brief description of the more important anti-deferral provisions.
- Passive Foreign Investment Company "PFIC"
- Controlled Foreign Corporation "CFC"
- Foreign Personal Holding Company "FPHC" (Repealed in 2004)