Section 1248(b): The individual Limitation on Taxing Sales of CGC Stock Offers Substantial Tax Savings.

Abstract This article says that individual limitation on taxing sales of controlled foreign corporation (CFC) stock offers substantial tax savings. This paper examines the applicability of the Section 1248(b) provisions, the calculation of the Section 1248(b) limitation, a comparison of the relative tax liabilities incurred under Sections 1248(a) and (b), and the effect of various variables, e.g. the foreign and U.S. corporate tax rates, and the individual income tax rates, on the effective U.S. tax rate on the Section 1248(a) dividend income under the Section 1248(b) limitation. A number of transactions fall outside the purview of Section 1248. These exceptions include, sales or exchanges of CFC stock resulting in a recognized loss, wash sale transactions, transfers of CFC stock by gift,11 transfers of CFC stock at death, redemptions of stock to which Section 303, distributions in redemption of stock to pay death taxes, applies,12 reorganizations, exchanges, or distributions to which the Section 356 "boot" rules apply,13 and transactions where, under another provision of Title 26 U.S.C., the amount in question is treated as dividend income, ordinary income, or gain from the sale of an asset held less than one year.