Hi thanks for responding.

The loss was in 2018 and so they have reported it on the 1040 as a reduction to income. Their return needs amended for this and a wrongly claimed FTC. 

The client had already applied for the classification and been approved by the IRS when they came to me so that's done and just need to report the change properly. 

It was a late election and IRS back dated it 75 days to Jan 30 2019 when the DE became effective. 

S. 962 I'm thinking would be a good idea because the CFC is a UK entity (high tax) and 80% deemed paid foreign tax credit after the 50% GILTI deduction would cover the tax for the period 1/1/19 to 1/31/19. Client is also a high earner and marginal tax rate is 32% so GILTI is definitely not the better option. What I wonder is though how that affects the DRE classification for the rest of the year if the US SH elects to be treated as a domestic corp? Can it just be for the CFC period January 2019 before FDE classification?

Entity is on a calendar year ending 12/31/2019. So I had thought to treat the CFC on a short year up to 30/1/2019 when it becomes an FDE then the remainder from Feb to Dec is on the Schedule C and 8858.

With the deemed liquidation upon entity classification they would have a deemed dividend. I've calculated the CY E&P (positive) and the ACC E&P(which is $0 for distributions for tax because it's negative). The basis in stock is very small leaving a sizeable amount to be distributed from CY E&P. 

However, in that month we had a cancelled/recovered accrued expense from the PY that I think we can exclude as it had no effect on the tax (income or GILTI) under s.111. If that's the case we could bring that dividend down I think - another thing to think about 🙂

Thanks for you input.