International Aspects of the US Taxation System by Felix I. Lessambo

Author:Felix I. Lessambo
Language: eng
Format: epub
Publisher: Palgrave Macmillan US, New York

Anti-abuse rules for becoming or ceasing to be a member of a group

If a corporation becomes a member and ceases to be a member, and a principal purpose of the corporation becoming and ceasing to be a member is to transfer the corporation’s OFL account, SLL account, or ODL account to the group or to transfer the group’s COFL, CSLL or CODL account to the corporation, appropriate adjustments will be made to eliminate the benefit of such a transfer of accounts. Similarly, if any member acquires assets or disposes of assets (including a transfer of assets between members of the group and the departing member) with a principal purpose of affecting the apportionment of accounts under IRC 904 (c)(2)(i) of this Section, appropriate adjustments will be made to eliminate the benefit of such acquisition or disposition.

The overall domestic account

An ODL account, in contrast, can only be created in a credit year. If a US loss offsets foreign source income in a deduction year, the loss would not be a domestic loss that could be added to the taxpayer’s ODL account. As a result, the taxpayer would not be able to recapture the detriment of having a US loss offset foreign source income in a later year by resourcing US as foreign source income in that later year. If the taxpayer elects the FTC in the later year, this means that it will have less foreign source income and a lower FTC limitation.

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