One thing nobody has mentioned yet is that if your acquisition is structured as an asset purchase rather than a stock purchase, many of these CFC compliance issues become moot. You'd be creating a new foreign subsidiary rather than stepping into the shoes of an existing CFC with potential compliance problems. Of course, this approach has its own complications (foreign asset transfer taxes, etc.) but it's worth considering if the due diligence is revealing significant compliance risks with the existing entity.

One critical aspect that hasn't been fully addressed is the potential Section 965 transition tax implications. If this CFC has accumulated post-1986 earnings and profits that haven't been subject to US tax, you could inherit a significant transition tax liability that was deferred from 2017. When you acquire the CFC, any unpaid Section 965 transition tax liability generally transfers to you as the new US shareholder. This could be substantial depending on the CFC's accumulated E&P and the foreign tax credits available. The previous nonresident alien owner wouldn't have been subject to this tax, so it might be sitting there as an undiscovered liability. I'd strongly recommend having your tax advisor specifically analyze the CFC's accumulated earnings and profits since 1986 and calculate what the Section 965 liability would have been. This could significantly impact your acquisition price negotiations and might even make the deal uneconomical if the liability is large enough. Also consider requesting representations and warranties from the seller regarding all potential US tax liabilities, not just the obvious Form 5471 filing issues.

This thread has been super helpful. Just a heads up for anyone with kids - make sure you're also looking into the Earned Income Tax Credit (EITC) if you have lower income. It works differently than the Child Tax Credit and might help you even if you don't qualify for the full CTC. I almost missed out on over $3,000 from the EITC last year until my tax preparer caught it. The income thresholds are different, and you might still qualify for partial EITC even with lower income. Worth checking!

Great question about the EITC! The bill does include some changes to the Earned Income Tax Credit as well, though they're not as significant as the Child Tax Credit modifications. For 2024, the EITC will have slightly adjusted income thresholds and phase-out ranges, but the basic structure remains the same. The maximum credit amounts are also being increased modestly - I believe around $200-300 more for families with children, depending on the number of kids. The good news is that if you qualify for EITC, you can claim it alongside the Child Tax Credit. They work independently of each other. So even if someone doesn't have enough earned income to get the full refundable portion of the CTC, they might still benefit significantly from the EITC. I'd recommend using the IRS EITC Assistant tool on their website - it's actually pretty user-friendly compared to some of their other resources, and it will tell you exactly what you qualify for based on your income and family situation.

Question: has anyone dealt with the actual process of cashing these HH bonds? I've heard some banks won't even cash savings bonds anymore, especially the older series. Do you have to mail them somewhere?

Just want to add another perspective based on my experience with my nephew's bonds last year. Since your daughter is 16 and the bonds are in her name, reporting on her return is definitely the way to go given her low income level. One thing to keep in mind - make sure you get the 1099-INT from the Treasury when you cash the bonds. It will break down the taxable interest clearly. For HH bonds that were converted from EE bonds, there can be two components: the deferred interest from the original EE bonds (which becomes taxable now) and any interest earned by the HH bonds themselves. Also, even though your daughter might not technically be required to file if her total income stays under the standard deduction, it's probably worth filing anyway. She'll likely get back any taxes withheld from her summer job, and it establishes a good paper trail for the bond interest reporting. The IRS likes to see consistency, especially with larger amounts like this. The whole process was much simpler than I expected once I understood the rules. Good luck!

I completely understand your frustration - I went through the same nightmare when I first moved here! One thing that helped me was calling the IRS's dedicated line for international taxpayers at 267-941-1000. Since you're dealing with new resident filing questions, they're specifically trained for situations like yours and often have shorter wait times than the main number. Also, try calling right at 7 AM Eastern when they open - I've had much better luck getting through early in the morning. If you still can't get through, the Taxpayer Advocate Service mentioned by others is definitely worth trying. They can often help navigate complex situations for new residents. Good luck!

I've been through this exact same struggle! Here's what finally worked for me after weeks of frustration: Try calling 800-829-1040 and when you get to the automated system, press 1 for English, then 2 for personal tax questions, then 1 again for form/tax law questions, and finally 3 for all other tax questions. This specific sequence seems to bypass some of the endless loops. Also, I discovered that calling on Wednesday or Thursday afternoons around 2-3 PM Eastern actually had shorter wait times than the early morning rush everyone talks about. And definitely have your Social Security Number and last year's AGI ready - they ask for it immediately. As a fellow newcomer, I also recommend checking if your local library offers free tax preparation services through the VITA program - they helped me understand the new resident filing requirements without the phone hassle!

Just got those same codes last week! lets hope we both get paid soon

TC 571 is actually a good sign! It means the IRS is releasing a previous hold or reversing an adjustment. Combined with TC 971, you should be getting a notice explaining what happened. I had the same codes last year and got my refund about 3 weeks later. The waiting is brutal but you're probably in the home stretch now. Check your transcript weekly for TC 846 - that's when you'll see your actual refund date!