Robert A. Stanford and Susan Stanford - Page 13

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          corporations, as in a parent-subsidiary relationship and not                
          where the CFC's are related to each other through a common                  
          parent, as in a brother-sister relationship.  Section                       
          952(c)(1)(C) provides, in part, as follows--                                

                    (C) Certain deficits of member of the same chain of               
               corporations may be taken into account.--                              
                         (i) In general.--A controlled foreign corporation            
                    may elect to reduce the amount of its subpart F income            
                    for any taxable year which is attributable to any                 
                    qualified activity by the amount of any deficit in                
                    earnings and profits of a qualified chain member for a            
                    taxable year ending with (or within) the taxable year             
                    of such controlled foreign corporation to the extent              
                    such deficit is attributable to such activity. * * *              
                         (ii) Qualified chain member.--For purposes of this           
                    subparagraph, the term "qualified chain member" means,            
                    with respect to any controlled foreign corporation, any           
                    other corporation which is created or organized under             
                    the laws of the same foreign country as the controlled            
                    foreign corporation but only if--                                 
                              (I) all the stock of such other corporation             
                         * * * is owned at all times during the taxable               
                         year in which the deficit arose (directly or                 
                         through 1 or more corporations other than the                
                         common parent) by such controlled foreign                    
                         corporation * * * [or vice versa].  [Emphasis                

               With regard to the "same qualified activity" requirement of            
          the TAMRA chain deficit rule, the business activity of the                  
          profitable and the unprofitable CFC's must arise from one of the            
          same specified types of activity listed in section                          
          952(c)(1)(B)(iii), as follows:                                              

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Last modified: May 25, 2011