Question

What is the Internal Revenue Code Section 245 and what are the purposes and limitations?

Answer 1

Internal Revenue Code Section 245 is associated with dividends received from certain foreign corporations.In other words we can say that Section 245 of Indternal Revenue Code deals with received dividends from certain foreign corporations.

Purposes of Internal Revenue Code Section 245;

Internal Revenue Code Section 245 surves following purposes;

·        Dividends from 10-percent owned foreign corporations

·        Certain dividends received from wholly owned foreign subsidiaries

·        Certain dividends received from FSC

Limitations of Internal Revenue Code Section 245;

Internal Revenue Code Section 245 has some limitations also. Although we know that every section of any law serve for some specific purpose but also has some limitation.

Internal Revenue Code Section 245 also has limitation like; dividend received deduction (DRD) is available to the U.S. corporation only for the U.S. income portion of the dividend from a "qualified 10%-owned foreign corporation. Hence we can say that this is the main limitation of this section.