For example, a foreign company may elect to exclude from FPHCI
any foreign exchange gain from working capital sitting in a non-interest-bearing account (thus not giving rise to interest income) and held to purchase inventory used in the ordinary course of business to produce sales income.
image rights have significant value compared to his worldwide image rights), that income likely would be considered FPHCI
and, therefore, subject to current U.
244) Passive income generally means income that would be FPHCI
under Subpart F.
consists of passive income, such as interest, dividends, annuities, net gains from sale of property that does not generate active income, net commodities gains, net foreign currency gains, certain rents and royalties, and income from personal service contracts.
Under such circumstances, the entire gain or loss is either included in or excluded from FPHCI
, generally depending on the predominant use of the property during the period the CFC held it before the disposition.
includes most forms of passive income, such as dividends, interest, royalties, rents, annuities, and the excess of gains over losses from the sale or exchange of property that gives rise to passive income.
If, under the software regulations, the transfer of software is characterized as a license by the CFC to its customer, the CFC is treated as receiving royalty income, which is FPHCI
954(c)(1)(B)(iii), concluding that gain from the sale of surplus allowances could be excluded from FPHCI
Under the gross-income test, a foreign corporation will be treated as a PFIC if 75% or more of its income for the year is FPHCI
(within the meaning of Sec.
Gain on sale: The $2,500 gain from the sale of the stock (as well as any bonds sold) similarly will be FPHCI
The corporation would then risk being classified as a PFIC, because rental income is generally considered FPHCI
954(c)(6), enacted by TIPRA Section 103(b), treats dividends, interest, rent and royalties received or accrued from a related CFC to be outside the definition of FPHCI
, to the extent attributable or properly allocable to the related person's income that is not subpart F income.