A controlled foreign corporation is a foreign corporation more than 50 percent owned by U.S. shareholders who each hold at least 10 percent, and its U.S. owners must report on Form 5471 and may owe tax on the corporation's income before it is distributed.
Subpart F income and GILTI can pull a CFC’s earnings into its U.S. owners’ returns currently. Attribution rules count ownership through family members and entities.
Why it matters: an American who owns a small company abroad often has a CFC without knowing it. See Form 5471.
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