By Lowell D. Yoder, Esq.
McDermott Will & Emery, Chicago, IL
Generally, a loan made by a subsidiary to its parent or to an affiliate is not a taxable event. Subpart F, however, provides a limited exception. When a controlled foreign corporation ("CFC") makes a loan to a related U.S. person, the United States shareholder ("U.S. shareholder") of the CFC includes in its income the average of the amounts of such loans outstanding on the last day of each quarter.1