Deferral of home-country tax on the income of foreign subsidiary corporations produces the twin evils of business and investment location distortion and profit shifting. In 1961, the Kennedy administration proposed the almost complete elimination of this type of deferral from the US income tax system. Because of strong opposition lobbying, the result was a political compromise commonly known as Subpart F. This article explains why Subpart F was largely a failure, in spite of its being copied to various degrees by the controlled foreign corporation (CFC) regimes of many developed countries. The article also explores the extent to which the 2017 Tax Cuts and Jobs Act (TCJA) has, or has not, cured Subpart F’s failure to effectively address location distortion and profit shifting.