Legal translation and legal interpreting services come in handy in all international tax matters. Last spring the Treasury Department and IRS published a notice regarding the classification of Subpart F Income Partnership income. According to the notice, certain domestic partnerships will soon be classified as foreign partnerships for purposes of identifying which of the partners are US shareholders within a controlled foreign corporation (CFC). The reason for this is that CFC’s are required to include gross income in their filings.
Under the US Tax Code, when a US taxpayer wholly owns two CFCs, each of which owns 50 percent of another CFC through a domestic partnership, then the third CFC has Subpart F income. According to Code section 951, this qualifies the US shareholder as needing to report Subpart F income. However, due to the complex nature of CFCs, which often span across numerous borders, determining the chain of command will require the interpretation of various incorporating deeds. When these deeds are in a foreign language, a foreign language translation will be required.