Archives: CFC/Subpart F & Section 956

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The Malta Pension Plan – A Supercharged, Cross-Border Roth IRA

Relevant US Tax Principles In the cross border setting, two of the principal goals in international tax planning are (i) deferral of income earned offshore and (ii) the tax efficient repatriation of foreign profits at low or zero tax rates in the United States. For U.S. taxpayers investing through foreign corporations, planning around the controlled … Continue Reading

Creating Non-Taxed “Previously Taxed Income”: The Ultimate Pre-Immigration Strategy

According to recent statistics, immigrants and their U.S.-born children now number approximately 84.3 million people, or 27% of the overall U.S. population.   The countries from which the largest numbers of these individuals originate include India, China, Mexico, and Canada.  Many of those moving to the United States are wealthy business owners who will continue to … Continue Reading

Minimizing Tax on Gain from the Sale of Stock of Latin American CFCs

The United States currently has only two income tax treaties in effect with Latin American jurisdictions: Mexico and Venezuela. As a result, most individual taxpayers who recognize gain from the sale of stock of a controlled foreign corporation (CFC)1 located in Latin America (other than in Mexico or Venezuela) assume that such gain will be … Continue Reading

Cancellation of CFC Loans to US Shareholders – Should the Service Get a Second Bite at the Apple?

The Service generally has three years after a return is filed to assess any tax due for that year.1 There are a number of exceptions to this general rule, such as where a taxpayer files a false return or omits more than 25 percent of its gross income from the return. There are no exceptions, … Continue Reading

Inbound and Outbound U.S. Tax Planning for Bona Fide Residents of Puerto Rico

Since Puerto Rico enacted the “Individual Investors Act” (Act 22) and the “Export Services Act” (Act 20) in 2012, much press has been devoted to the number of high-net worth U.S. taxpayers (including citizens and green card holders) who have relocated to Puerto Rico and become “bona fide residents” of such U.S. possession. The primary … Continue Reading

Change in the UK Treatment of Dual-Resident Companies May Affect U.S. Tax Planning

On November 30, 2015, the UK tax authorities at HM Revenue and Customs (HMRC) reached an agreement with Jersey about the interpretation of the company residence tie-breaker provision of the Jersey-UK income tax treaty.  After reviewing other income tax treaties that contain similar provisions, HMRC will now take the view that the tie-breaker clause will … Continue Reading

Recent Chilean Tax Reform Reinforces Need for U.S. Tax Treaty

Chile is the fifth largest economy in South America and increasingly one of the most significant U.S. trading partners in the region. U.S. foreign direct investment into Chile was $39.9 billion for 2012 (the latest year for which official figures are available). And in 2013, the U.S. exported $17.6 billion of goods and services to … Continue Reading

Is a Distribution of Previously Taxed Income “Exempt from Tax”?

A U.S. shareholder of a controlled foreign corporation (CFC) is required to include in its gross income its pro rata share of the CFC’s subpart F income and/or the amount determined under Section 956 with respect to such shareholder, regardless of whether any actual distributions are made to such shareholder. Because this income was taxed … Continue Reading

A Digital Encyclopedia: Bilzin Sumberg’s Blogosphere

Bilzin Sumberg prides itself as being the go-to firm for domestic and international investors and corporations doing business in Florida and beyond. We aim to provide our clients with legal and business insight into the industries and areas they work in through our various blogs, which hone in on key issues or areas of interest … Continue Reading

Ruling Demonstrates Potential for Inversion Rules to Apply in Inbound Structures

In Private Letter Ruling 201432002 (the “PLR”), the IRS ruled that a foreign-to-foreign “F” reorganization did not implicate the Section 7874 anti-inversion rules.  As a result, a foreign corporation (that was 100 percent foreign owned) was not deemed to be a U.S. corporation for U.S. federal income tax purposes, despite the fact that it was … Continue Reading

IRS Disregards Own Revenue Ruling in Barnes Decision

The Court of Appeals for the Second Circuit recently affirmed the Tax Court’s 2013 decision in Barnes Group, Inc. and Subsidiaries, T.C. Memo 2013-109, in which the Tax Court applied the step transaction doctrine to recharacterize a series of transactions employed by the taxpayer, a U.S. corporation, as part of its reinvestment plan.  The result … Continue Reading

10th Annual University of Florida International Tax Symposium

On Friday, October 31, I will be speaking at the 10th Annual University of Florida International Tax Symposium held at the University of Florida, Levin College of Law in Gainesville, Florida. I, along with the other speakers, will discuss important topics revolving around current and future international tax policy. The presentation will begin at 8:00 am in … Continue Reading

Death of the “Double Irish Dutch Sandwich”? Not so Fast.

On October 14, 2014, the Irish Minister for Finance released proposals as part of the 2015 Irish Budget that would cause Irish incorporated non-resident (“INR”) companies to be treated as tax resident in Ireland beginning January 1, 2015. The goal is to shut down the use of so-called “Double Irish” and “Double Irish Dutch Sandwich” … Continue Reading

“Return of Basis” Repatriation Strategy Tested in Tax Court

U.S. multinationals literally have trillions of dollars of untaxed earnings purportedly “trapped” offshore because of the associated high U.S. corporate income taxes that would be incurred if these earnings were repatriated to the United States. While a number of strategies have been marketed to, and used by, U.S. multinationals in an attempt to repatriate these … Continue Reading

IRS Taking Closer Look at Section 956 Inclusions

Each “U.S. Shareholder” of a controlled foreign corporation (“CFC”) is required to include in their gross income as a deemed distribution their pro rata share of the amount determined under section 956 for that year (i.e., “Section 956 inclusion”). A Section 956 inclusion is generally equal to the lesser of (i) the amount of “U.S. … Continue Reading

American Bar Association Business Law Section Annual Meeting

On Thursday, September 11, I will be speaking at the inaugural American Bar Association – New Business Law Section Annual Meeting in Chicago, Illinois. The ABA Business Law Section Annual Meeting is being held from September 11-13 and is ideal for professionals that want to experience an all-inclusive business law programming event. The entirety of … Continue Reading

The NYU Summer Institute in Taxation Conference

On Tuesday, July 15, I will be speaking at an NYU School of Continuing Education conference in New York, NY. The Summer Institute in Taxation program is being held from July 14-25 and is ideal for new professionals that want a solid foundation in a specialized area of law or tax practice. Attorneys and accountants … Continue Reading

Affirmative Use of U.S. Partnerships in Inbound Tax Planning

A “U.S. shareholder” of a controlled foreign corporation (CFC) is required to include in its gross income its pro rata share of a CFC’s “subpart F” income, regardless of whether such income is distributed.  In general, a CFC is a foreign corporation that is more than 50 percent owned (directly, indirectly or constructively) by “U.S. … Continue Reading

Retroactive Tax Planning

Converting Subpart F Income into Qualified Dividends U.S. shareholders of foreign corporations are generally not subject to tax on the earnings of such corporations until the earnings are repatriated to the shareholders in the form of a dividend.  Moreover, when a foreign corporation is resident in a jurisdiction with which the United States has a … Continue Reading

Tax Planning for the Privatization of the Space Industry

The privatization of the space industry has seen dramatic growth in recent years, and it appears that more significant developments are on the horizon. During 2013, SpaceX (the space exploration company founded by Elon Musk, co-founder of PayPal and Tesla Motors) successfully launched a major communications satellite into orbit for a private satellite operator, and became … Continue Reading

Bloomberg BNA’s U.S. International Reporting & Compliance Seminar

On Tuesday, May 20th, I will be speaking at a seminar presented by Bloomberg BNA, entitled U.S. International Tax Reporting & Compliance. Held at the Marriot Biscayne Bay in Miami, the conference will also feature speakers from accounting firms Ernst & Young, KPMG and PwC. I will be speaking on “Computing the Gain from the … Continue Reading

The High-Tax Exception and Malta’s Refund System

A Match Made in Heaven U.S. shareholders of foreign corporations are generally not subject to U.S. federal income tax on the earnings of such corporations until those earnings are repatriated to the shareholders in the form of a dividend.  Where a foreign corporation is classified as a “controlled foreign corporation” (“CFC”), however, its “United States … Continue Reading
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