SECTION V FOREIGN for PROFIT CORPORATIONS a in Form

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in this video we're going to discuss subpart f income of controlled foreign corporations so companies in the us have an incentive to shift their profits overseas to low tax countries so they can reduce their overall tax bill so they'll set up a foreign subsidiary in a country like ireland that has a lower tax rate than the united states and they'll try and shift all their profits to the subsidiary in ireland and so to prevent this congress has drafted certain rules and basically certain types of income of a what's called a controlled foreign corporation will be taxed immediately to the u.s parent company okay so you've got a u.s shareholder for example they own shares in this controlled foreign corporation and they could let's say they have subpart f income of let's say 80 000 okay and you own 50 percent you're a us shareholder and you own 50 percent of this control foreign corporation and there's the 80 thousand dollars of subparagraph income you are taxed on your 50 of that subpart f