Lesson: Shareholders of Controlled Foreign Corporations

In this lesson, Nick Palazzolo, CPA, delves into the intricacies of U.S. tax implications for shareholders of Controlled Foreign Corporations (CFCs). He breaks down the definition of a U.S. shareholder, unpacking the requirements of ownership percentages in voting power and the significance of being a shareholder under specific IRC sections. Nick clarifies the concept of subpart F income, illustrating its impact on U.S. shareholders with undistributed income from CFCs. He punctuates the lesson with a hands-on example demonstrating how to calculate a corporation's increase in earnings invested in U.S. property. Along the way, Nick provides valuable insights into interpreting IRS guidelines for 'lesser of' and 'greater of' calculations, enriching the lesson with his engaging explanations of tax maneuvering and its repercussions for shareholders.