Standard principles of corporate taxation apply to controlled foreign corporations, so it is not surprising that corporate distributions may create dividend income for US shareholders. However, some distributions are indeed included in the shareholders' gross income, while others are not. We explore the rules for determining when a distribution received by a shareholder is taxable (or not) and how it is reported on the shareholder's income tax return.
Learning Objectives
• Identify distribution taxation rules as they apply to controlled foreign corporations
• Determine whether a corporate distribution from a controlled foreign corporation is taxable
Major Topics
• Form 5471
• Controlled foreign corporation
• Corporate distributions
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