​The Hsu Law Firm ​PLLC

Outbound Income Tax Planning

Anti-Deferral Regime Planning

When a U.S. individual or business expands overseas, two anti-deferral rules may apply - the controlled foreign corporation ("CFC") rules and the passive foreign investment company ("PFIC") rules.

1. CFC Planning

We help structure the outbound business expansions to avoid current income taxation on the foreign earnings so the foreign business may grow on a tax-deferred basis:

  • Non-CFC status planning
  • Foreign personal holding company income planning
  • Active rental income qualification
  • Foreign base company service income planning
  • Foreign base company sales income planning
  • Advice on IRS disclosure requirement of CFCs
  • GILTI planning

2. PFIC Planning

  • Non-PFIC status planning
  • Verification of PFIC status under the income text and the asset test
  • Advice on managing corporate distributions to avoid the excess distribution characterization
  • Calculation of excess distributions
  • Advice on qualified electing fund ("QEF") election and taxation
  • Advice on mark-to-market ("MTM") election and taxation
  • Advice on IRS disclosure requirement of PFICs

Foreign Tax Credit Planning

  • Utilization of the check-the-box elections to achieve the flow-through status for foreign operations to allow for current U.S. tax credit for foreign tax paid
  • Excess credit position planning
  • Utilization of income tax treaty to qualify for resourcing of certain income to allow for foreign tax credits

Repatriation of Foreign Accumulated Earnings

  • Qualified foreign dividend planning to qualify for lower capital gains rate
  • Advice on timing of repatriation