News Analysis: Managing Subpart F Services Income for Tech Companies


Lowell Yoder discussed at an International Tax Institute meeting the application of Subpart F foreign base company rules to intragroup services. Foreign base company services income exists when a controlled foreign corporation (CFC) performs services for a related entity outside the country where the CFC is organized, and Mr. Yoder recommended making a service contract directly between the CFC and the customer, and unchecking the CFC if it is checked. He added that checking does nothing to ameliorate an “on behalf of” situation.