The Internal Revenue Service has issued final regulations on controlled foreign corporations to provide rules about the treatment of U.S. property held by the CFC in connection with transactions involving partnerships.
The final regulations provide rules for determining whether a CFC is considered to be deriving rents and royalties during the active conduct of a trade or business in order to determine its foreign personal holding company income , along with rules for determining whether a CFC holds U.S property as a result of certain related-party factoring transactions.
This document finalizes proposed regulations, and withdraws temporary regulations, that were published last September . It also finalizes proposed regulations, and withdraws temporary regulations dating back to 1988. The final rules affect U.S. shareholders of CFCs.
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