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Deferral in the context of an outbound transaction refers to the practice of retaining foreign sourced income for a given year within a foreign entity to avoid recognition for U.S. income tax purposes for that year.
Outbound U.S. taxation rules deal specifically with attempts by U.S. persons to circumvent or defer U.S. taxation of foreign sourced income by generally subjecting income earned by a foreign corporation controlled by U.S. persons to immediate repatriation in the form of a “deemed dividend.”
