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EX 19: Taxable distribution from non-complying trust
or “Tax on money your company gets from a rule-breaking trust”
You could also call this:

“How CFC losses may be reduced to match actual financial losses”

When you have a loss from a controlled foreign company (CFC), there are special rules that might reduce the amount of loss you can claim. If you have a CFC loss but you don’t actually lose any money (or only lose a very small amount), your CFC loss will be reduced. This might happen if you have special financial agreements like call options or put options.

The same thing happens if your CFC loss is bigger than the actual money you lost. This could be because of how your income interest was calculated or for other reasons.

In both these cases, your CFC loss will be reduced to match the actual amount of money you lost, if any. This means you can’t claim a bigger loss than what you really experienced.

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Next up: EX 20B: Attributable CFC amount

or “Calculating overseas company income to include in your tax return”
Next

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Calculation of attributed CFC income or loss

EX 20Reduction in attributed CFC loss

  1. This section applies when—

  2. a person has an amount of attributed CFC loss; and
    1. the person suffers no, or substantially no, corresponding economic loss, whether because of a call option, a put option, or any other reason.

      1. This section also applies if—

      2. a person has an amount of attributed CFC loss; and
        1. the amount is more than any corresponding economic loss of the person, whether because of the application of the rules for calculating the person’s income interest or for any other reason.

          1. The attributed CFC loss is reduced to be equal to the economic loss, if any.

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