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Michael J. Wilder focuses his practice on corporate and international tax issues. He has extensive experience in structuring corporate mergers and dispositions, spin-offs, liquidations, cross-border transfers and financing instruments, as well as in the areas of consolidated returns, bankruptcy and insolvency tax matters. Michael represents clients in seeking private letter rulings from the Internal Revenue Service (IRS) and in handling audit and appeals matters. Michael is the leader of McDermott’s Corporate Tax Practice. Read Michael Wilder's full bio.

Following the 2017 Tax Act, the US tax costs to a corporate US shareholder that sells stock in a controlled foreign corporation (CFC) are significantly reduced. Beginning in 2018, the amount of gain will be generally less than in prior years and most or all such gain will frequently not be subject to any US federal income taxation.

The amount of gain recognized in a sale of course is the difference between the amount realized and the selling shareholder’s adjusted tax basis in the stock of the CFC. The initial basis in the stock of a CFC is increased by the amount of earnings of the CFC and its subsidiaries that was included in the gross income of the domestic corporation under Subpart F (i.e., previously taxed earnings). The increase in basis can be significant as a result of the transition tax Subpart F inclusion of post-1986 earnings of CFCs and the expansion of Subpart F inclusions for global intangible low-taxed income (GILTI).

The gain recognized by a domestic corporation upon the sale of stock in a CFC generally is capital gain subject to a 21 percent tax rate. Section 1248, however, recharacterizes as a deemed dividend all or a portion of the gain. The amount of gain recharacterized generally equals the amount of non-previously taxed earnings of the CFC and its foreign subsidiaries. Provided the domestic corporate shareholder held the CFC stock for at least one year, the amount of the gain recharacterized as a dividend generally is eligible for a 100 percent dividends received deduction under section 245A.


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A number of provisions included in the Senate’s tax reform bill, H.R. 1 (the Senate Bill) would impact the insurance sector. Many of the provisions would affect only the life insurance industry. Others affect property & casualty (P&C) insurance companies. Still others affect both life and P&C insurance companies.

We recently released the May 2016 issue of “Focus on Tax Strategies and Developments,” which can be viewed in its entirety here or through the links below. The issue includes four articles of interest to taxpayers:

Proposed Debt-Equity Regulations Have Dramatic Implications for Corporate Tax Planning and Compliance

By Thomas W. Giegerich and Michael J.