CFCs — Investment of Earnings in United States Property (Portfolio 6260)


Philip Fried




Kevin Liss

Director, International Tax Services

PricewaterhouseCoopers LLP

At a glance

I. Introduction
II. “United States Property” — Definition and Exceptions
III. Tangible Property Located in the United States
IV. Intangible Property Used in the United States
V. Stock of Domestic Corporations
VI. Obligations of U.S. Persons
VII. Special Problems Involving Payables and Receivables
VIII. Pledges and Guarantees
IX. Substance-Over-Form, Conduit, and Anti-Avoidance Rules in the § 956 Context
X. Exclusion for U.S. Property Investments Attributable to Specified Categories of Earnings
XI. Subpart F Exceptions that Are Not Available for § 956 Purposes
XII. Changes in CFC Status
XIII. Calculation of Amount of U.S. Property Held by the CFC
XIV. Calculations of Amount of § 951(a)(1)(B) Gross Income
XV. Effect of Distributions to Shareholders on § 956 Calculations
XVI. Adjusted Tax Basis, Earnings and Profits, and Foreign Tax Credit Considerations
XVII. Compliance Considerations


The Bloomberg Tax Portfolio, CFCs — Investment of Earnings in United States Property discusses the circumstances under which such investments may result in the taxation to the company's U.S. shareholders of a portion of the company's earnings and profits, and it explains the rules governing the computation of such income inclusion. It describes the possibility of unexpected results from the operation of the §956 rules, and it suggests planning possibilities to avoid pitfalls.

Among the matters discussed are the definition of the term “United States property” and the exceptions thereto; calculations of the amount of a controlled foreign corporation's earnings and profits invested in United States property and the effect of distributions on such calculations; special rules regarding the taxation of U.S. shareholders, including the applicable foreign tax credit rules; and tax planning opportunities.

Request pricing

Subscribe to Bloomberg Tax to read the full portfolio. Already a subscriber? Login.

This site is protected by reCAPTCHA and the Google Privacy Policy, and Terms of Service apply.

By submitting my information, I agree to the privacy policy and to be contacted about Bloomberg Industry Group products and services.

View all portfolios