Скачать или смотреть Foreign Tax Credit, part 6: Look Thru

Passive basket income received from related parties may be recharacterized as general basket. The recipient "looks through" the income to the payor's characterization of the payment. Look through for dividends is irrelevant after 2017, since the deemed paid credit on foreign dividends was repealed, and the dividends are fully deductible and don't enter into the foreign tax credit calculation.

Time Topic
00:00 Intro and review of passive basket
01:03 Why look through?
01:32 Look through basics
02:49 Applies only to CFCs
04:33 Applies only to income that would be foreign personal holding company income
06:25 De minimis rule
07:30 Exceptions to look through
09:04 Look through interest, rent and royalty income
11:17 Quiz & closing

Quiz:
b1. Fred receives interest from a foreign corporation of which he owns 65%. The corporation makes all its income selling goods. What basket is the interest income?
a. General
b. Passive
b2. Mega Inc. receives interest of $100 from its 20% foreign sub, which is a CFC. The sub's E&P is $800 from selling goods and $200 from investments. How much of the interest is passive?
a. Zero
b. $20
c. $80
d. $100
b3. Mega Inc. receives $50,000 of interest from its 100% foreign sub. The sub has no prior E&P. Its current E&P is $2 million from selling goods and $20,000 from interest. How much of Mega's interest income is passive?
a. Zero
b. $200
c. $20,000
d. $50,000
b4. To which one of the following does look through apply?
a. Interest received from an 8% owned foreign sub.
b. Interest received from a 20% owned foreign sub that is 80% owned by a German woman.
c. Interest received from a 20% owned foreign sub that is 40% owned by Mega's German sub.

Resources:
Law:
26 USC 904(d) http://uscode.house.gov/view.xhtml?re...