Look Thru

Definition of 'Look Thru'


A complex provision defined in section 954(c)(6) of the U.S. Internal Revenue Code that lowered taxes for many U.S. multinational companies. The look thru rule gave qualifying U.S. multinationals a lower global effective tax rate by providing a special accounting method for calculating taxes owed on income from controlled foreign corporations. The rule was originally effective from Jan. 1, 2006 through Dec. 31, 2009, but the 2010 Tax Relief Act extended the rule through Dec. 31, 2011.

Investopedia explains 'Look Thru'


The look thru rule allowed companies to exclude certain dividends, interest, rents and royalties attributable to a controlled foreign corporation from Subpart F income. A controlled foreign corporation is owned by U.S. citizens but does business in a different country. Owners might want their company to operate abroad if it is less expensive and/or if there is an overseas market for the company's service or product.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. Treasury Inflation Protected Securities - TIPS

    A treasury security that is indexed to inflation in order to protect investors from the negative effects of inflation. TIPS are considered an extremely low-risk investment since they are backed by the U.S. government and since their par value rises with inflation, as measured by the Consumer Price Index, while their interest rate remains fixed.
  2. Gilt-Edged Switching

    The selling and repurchasing of certain high-grade stocks or bonds to capture profits. Gilt-edged switching involves gilt-edged security, which can be high-grade stock or bond issued by a financially stable company such as the Blue Chip companies or by certain governments.
  3. Master Limited Partnership - MLP

    A type of limited partnership that is publicly traded. There are two types of partners in this type of partnership: The limited partner is the person or group that provides the capital to the MLP and receives periodic income distributions from the MLP's cash flow, whereas the general partner is the party responsible for managing the MLP's affairs and receives compensation that is linked to the performance of the venture.
  4. Class Action

    An action where an individual represents a group in a court claim. The judgment from the suit is for all the members of the group (class).
  5. Retail Sales

    An aggregated measure of the sales of retail goods over a stated time period, typically based on a data sampling that is extrapolated to model an entire country. In the U.S., the retail sales report is a monthly economic indicator compiled and released by the Census Bureau and the Department of Commerce.
  6. Okun's Law

    The relationship between an economy's unemployment rate and its gross national product (GNP). Twentieth-century economist Arthur Okun developed this idea, which states that when unemployment falls by 1%, GNP rises by 3%. However, the law only holds true for the U.S.
Trading Center