Subpart F Income

A category of income earned by Controlled Foreign Corporations (CFCs) that is taxed currently to US shareholders even if not distributed. Subpart F targets passive and mobile income — dividends, interest, rents, royalties, certain insurance income, and specific related-party sales — to prevent US persons from deferring US tax by parking investment income in low-tax foreign entities. It predates GILTI (1962 vs 2017) and continues to apply alongside it: Subpart F catches narrower, more abusive categories; GILTI sweeps up most remaining deferred active-business income. Both require annual reporting on IRS Form 5471.