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Treatment of Foreign Token Vehicles -- PFIC rules

Disclaimer

I've been thinking about how a foreign corporation formed to hold and manage tokens should be treated for US tax purposes.  [Note, all of the following would be changed by the current Tax Bills being reviewed in Congress, but who knows what any new law will actually say.]

Elsewhere on this blog I've discussed whether such a corporation could avoid generating "Subpart F Income" if it is a CFC ("Controlled Foreign Corporation" -- one that is more than 50% owned by US persons who each own more than 10% of the foreign corporation).  My conclusion was that there was a significant risk that, other than in the case of certain utility tokens, it was likely the IRS would claim the income of that foreign corporation was "Foreign Personal Holding Company" income ("FPHC income"), which would essentially eliminate the benefits of running the business through a foreign vehicle.

I did not discuss, however, what would happen if you caused the…