Participation Exemption Regime Under Section 245A (Portfolio 6130)

Bloomberg Tax Portfolio, Participation Exemption Regime Under Section 245A, No. 6130, discusses the rules for a domestic corporation claiming a deduction under §245A of the Code with respect to certain dividends received from a 10%-owned foreign subsidiary.

This Portfolio examines the operative rules under §245A, including the statutory and regulatory anti-abuse provisions that deny, in whole or in part, a deduction for certain dividends. It also discusses whether a §245A deduction is available for dividends received indirectly through partnerships and by a controlled foreign corporation (CFC). Finally, the Portfolio reviews other provisions of the Code that are implicated when a §245A deduction is allowed with respect to a dividend.

Table of Contents

I. Introduction
II. Background and Role of §245A
III. General Overview of §245A
IV. Application to Partnerships that Receive a Dividend From a Specified Foreign Corporation
V. Application of §1248(j) Dividends and §964(e)(4)(A) Dividends
VI. Gain Recognition and Income Inclusions Under §367(a), §367(b), and §367(e)
VII. §245A(e): Hybrid Dividends and Tiered Hybrid Dividends
VIII. Reg. §1.245A-5: Ineligible Amounts
IX. Section 1059: Extraordinary Dividends
X. Coordination of Disqualified Basis and Extraordinary Disposition Account Provisions
XI. Section 245A(d): Coordination With Foreign Tax Credit Provisions
XII. Availability of §245A Deduction When Computing the Subpart F Income of a Controlled Foreign Corporation
XIII. Section 961(d) and §964(e)(4)(B)