Jokerz, a CFC of a U.S.parent, generated $80,000 of Subpart F foreign base company services income in its first year of operations. The next year, Jokerz distributes $50,000 cash to the parent, from those service profits. The parent is taxed on $80,000 in the first year and $50,000 in the second year.

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The parent is taxed on the $80,000 of Subpart F income in the first year when it is earned, but the $50,000 distribution in the second year is not taxed again as it is a return of previously taxed income.