Is the controlled foreign corporation lookthrough rule in (c)(6) permanent?
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Yes, the controlled foreign corporation (CFC) look-through rule in section 954(c)(6) is now permanent.
1. Legal Background and Prior Law:
Section 954(c)(6) provides that dividends, interest, rents, and royalties received or accrued by a CFC from a related CFC are not treated as foreign personal holding company income (FPHCI) to the extent attributable or properly allocable to income of the payor CFC that is neither subpart F income nor income effectively connected with a U.S. trade or business.
Historically, this look-through rule was enacted as a temporary measure and had been extended multiple times, most recently through tax years of foreign corporations beginning before January 1, 2026.
2. Change under the One Big Beautiful Bill Act (OBBBA):
The OBBBA, effective for tax years of foreign corporations beginning after December 31, 2025, makes the look-through rule of section 954(c)(6) permanent. This means that, going forward, CFCs can continue to receive dividends, interest, rents, and royalties from related CFCs without such amounts being automatically treated as subpart F income, provided the underlying income is not subpart F income or effectively connected income.
This change is confirmed by both statutory summaries and professional commentary, which note that the OBBBA "makes permanent the long-standing look-through rule under Section 954(c)(6)".
3. Effective Date:
The permanent extension applies to taxable years of foreign corporations beginning after December 31, 2025.
Summary: The CFC look-through rule in section 954(c)(6) is now a permanent feature of the Internal Revenue Code, removing the prior sunset and providing ongoing certainty for multinational tax planning.
Caveat:The look-through rule continues to apply only to the extent that the payments are attributable to income of the payor CFC that is not subpart F income or effectively connected income, and certain anti-abuse and allocation rules remain in effect.
Conclusion: The look-through rule in section 954(c)(6) is now permanent for tax years of foreign corporations beginning after December 31, 2025.
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