Hi !!

When a C Corp is owned 100% by a Foreign entity, and the "C" corp had income in year 2017 and paid its taxes....and year 2018 & year 2019 had NOLs, which exceeded income in year 2017... making the Retained Earnings as of 12/31/2019 in a negative amount...

Assuming the Accumulated E&P is negative amount... if we paid a distribution to the C Corp only Foreign shareholder:

1) Do we need to withhold 30% of such distribution..?

2) and if it is no withholdings (as it would not be considered a Dividend), it would be considered Capital reduction...do we need to file any specific forms, reporting such distribution..or it is only reported in form 1120, schedule M-2, box 5 " cash distribution" ...

Thanks!

Hernan Jasin