What is a controlled foreign corporation?
Tax Professional Answers
Code section 951(b) defines a U.S. shareholder as any U.S. person who owns 10% or more of the total combined voting power of all classes of stock of the foreign corporation.
Indirect ownership, in general, consists of stock beneficially owned by a U.S. person through a foreign corporation, partnership, trust and estate. I.R.C. § 958(a)(2).
In general, constructive ownership treats stock owned by an individual as owned by his or her spouse, children, grandchildren and parents. I.R.C. § 318.
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