Controlled Foreign Corporation Effects on U.S. Expats
- Foreign Based Holding Company Income: this consists of royalties, rents, annuities, interests and dividends.
- Foreign Based Company Sales Income: this includes any income from the sale or purchase of a personal property to or from a related person. The property must have been manufactured and sold outside of the country of incorporation.
- Foreign Based Company Service Income: this means any income for the delivery of personal service for the CFC for or on behalf of a related person. The service must have been performed outside of the country of incorporation.
- Insurance Income: this is income, which came as a result of issuing insurances on properties, liability arising out of an activity, or life and health of people. The properties, activities or persons must have been or residing a country different than the country of incorporation.
There’s a rule which allows the second and third components to be excluded from the gross Subpart F income, as well as any insurance income which is up to $1 million or makes up 5% of the gross income (the lesser applies) .
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