Irc Section 956

Application to domestic partnerships.

Irc section 956. 956 results in an income inclusion to a u s. Shareholders of a cfc that are not eligible for a drd under section 245a such as regulated investment companies and real estate investment trusts. Section 956 will continue to apply to individuals who are u s.

Irc 951 a 1 b and 956 create a mechanism pursuant to which the cfc s ownership of certain assets that meet the definition of u nited states property us property may give rise to a current income inclusion an irc 956 inclusion to a united states shareholder as defined in irc 951 b us shareholder with respect to the cfc. 956 works as a two edged sword that can be effectively used by both the irs and a taxpayer. Any movable property other than a vessel or aircraft which is used for the purpose of exploring for developing removing or transporting resources from ocean waters or under such waters when used on the continental shelf of the united states.

10 percent shareholders of a cfc. 956 generally applies where a cfc makes certain investments in u s. Section 956 of the us internal revenue code section 956 has historically loomed large in the context of finance transactions because it limited the ability of us borrowers to use overseas assets or revenues of foreign subsidiaries as additional collateral or credit support for such transactions.

Multiple calculations are required to determine the irc 956 inclusion. Final regulations from the u s. In determining for purposes of any taxable year referred to in the preceding sentence the amount referred to in section 956 a 2 a of the internal revenue code of 1986 for the last taxable year of a corporation beginning before january 1 1976 the amendments made by this section shall be deemed also to apply to such last taxable year.

Us code section 956 calls for the inclusion in the income of us taxpayers for certain investments that a controlled foreign corporation cfc has made into us property. Further section 956 will continue to apply to other u s. If left unchecked the existence of section 956 can sneak up on unsuspecting taxpayers and leave them with less than ideal tax implications.

For purposes of section 956 an obligation of a business entity as defined in 301 7701 2 a of this chapter that is disregarded as an entity separate from its owner for federal tax purposes under 301 7701 1 through 301 7701 3 of this chapter is treated as an obligation of its owner. 956 c 2 g.