What does CFC stand for in tax terminology?

CFC stands for Controlled Foreign Corporation in tax terminology. This term is significant in international tax law and relates to the categorization of foreign corporations that are controlled by U.S. shareholders. A Controlled Foreign Corporation is defined based on ownership thresholds—specifically, when more than 50% of the total combined voting power of all classes of stock or more than 50% of the total value of the stock of a foreign corporation is owned by U.S. shareholders.

The designation of a corporation as a CFC has important tax implications for U.S. shareholders, including taxation on certain types of income, known as Subpart F income, even if that income is not repatriated back to the U.S. This provision aims to prevent tax deferral through the use of foreign entities and ensures that certain kinds of foreign income remain subject to U.S. taxation.

The other choices do not hold relevance in the context of U.S. tax terminology. For instance, while certified finance institutions and cooperative financial companies do exist, they do not conflate with the significant tax-related impacts of controlled foreign corporations. Therefore, understanding the implications of CFC status is crucial for individuals and corporations involved in international business and tax compliance.