International Tax

Controlled Foreign Corporation

A controlled foreign corporation, or CFC, is a foreign corporation that is sufficiently owned by certain US shareholders under US tax rules.

Quick answer

A controlled foreign corporation, or CFC, is a foreign corporation that is sufficiently owned by certain US shareholders under US tax rules.

It matters because US owners may need to report income or disclosures even when cash was not distributed to them.

A US owner of a foreign operating company may need to analyze whether CFC rules apply each year.

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Plain-English Definition

What Controlled Foreign Corporation means

A controlled foreign corporation, or CFC, is a foreign corporation that is sufficiently owned by certain US shareholders under US tax rules.

Why it matters It matters because US owners may need to report income or disclosures even when cash was not distributed to them.
Simple example A US owner of a foreign operating company may need to analyze whether CFC rules apply each year.
Related Questions

Questions people ask about Controlled Foreign Corporation

What does Controlled Foreign Corporation mean?

A controlled foreign corporation, or CFC, is a foreign corporation that is sufficiently owned by certain US shareholders under US tax rules.

Why does Controlled Foreign Corporation matter?

It matters because US owners may need to report income or disclosures even when cash was not distributed to them.

What is a simple example of Controlled Foreign Corporation?

A US owner of a foreign operating company may need to analyze whether CFC rules apply each year.

When should I ask a CPA about Controlled Foreign Corporation?

Ask a CPA when the term affects foreign reporting, double taxation, expat filing, or account disclosure rules.

How is Controlled Foreign Corporation different from Subpart F Income?

Controlled Foreign Corporation means A controlled foreign corporation, or CFC, is a foreign corporation that is sufficiently owned by certain US shareholders under US tax rules. Subpart F Income means Subpart F income is the category of foreign corporation income that certain US shareholders may need to include currently under US tax rules. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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