That article does not apply to us. Trading income (Capital gains) = passive income
Subpart F was designed to prevent US citizens and resident individuals and corporations from artificially deferring otherwise taxable income through use of foreign entities.
Passive income (net expenses) such as capital gains, dividends, interest, royalties, rent, annuities, offshore shipping and personal service contracts are treated as Subpart F income.
Subpart F income whether distributed or not is taxable to the US shareholders personal return (or corporate return if a US corporation is the owner) in the year it occurs as ordinary income.
Income in from other types of operating businesses such retail stores, factories, etc. that do not have operations in the US and do not purchase goods from a US affiliate of the business is not taxed to the Controlled Corporation shareholders until it is actual distributed to them.
- Renounce your citizenship and move out the US
- Are an expat (in the US <35 days in a yr) and exempt from your first 100K in foreign income
- Own a foreign controlled corporation (CFC) with non passive income (ex. Sales)
There is no such thing as eliminating US taxes. #3 is really just a tax strategy multi national corps use to defer their foreign sales income (GE, Microsoft & Apple ect.). They also make foreign acquisitions with that offshore money tax free.