Most of the attention surrounding the international aspects of Public Law No. 115-97, formerly known as the Tax Cuts and Jobs Act (the “Tax Reform Act”), has understandably focused on outbound provisions, including Section 951A (GILTI), Section 250 (FDII), Section 965 (deemed repatriation tax), and Section 245A (dividends received deduction).[1] The scope of the implications … Continue Reading
The Tax Cuts and Jobs Act (“TCJA”) represents the most significant tax reform package enacted since 1986. Included in this reform are a number of crucial changes to existing international tax provisions. While many of these international changes relate directly to U.S. corporations doing business outside the United States, they nevertheless will have a substantial … Continue Reading
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
The Multilateral Instrument On June 7, 2017, the formal signing ceremony of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (the “Multilateral Instrument” or “MLI”) took place. Sixty-eight jurisdictions have signed the MLI, with another nine jurisdictions signing a letter indicating their intent to sign the MLI.[1] … Continue Reading
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
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
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
On April 4, 2016, the IRS and Treasury issued proposed regulations under Section 385 (the “Proposed Regulations“).1 The Proposed Regulations, which were thought to have been a response to post-inversion earnings stripping transactions, have been heavily criticized as being overbroad and potentially impacting many ordinary business transactions, both in the domestic and international settings. Under … Continue Reading
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
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
According to recent estimates, Chinese investors represented the largest group of foreign investors in U.S. real estate in the second quarter of 2015 with $1.9 billion in acquisitions. In the last 12 months, Chinese investors acquired $5.9 billion in commercial U.S. real estate, and Asia was second overall to Europe for foreign investment in U.S. … Continue Reading
In Summa Holdings, Inc. v. Commissioner, T.C. Memo 2015-119, the Tax Court recharacterized an exporter’s deductible commission payments made to an IC-DISC as non-deductible dividend payments to the exporter’s shareholders followed by contributions by those shareholders to certain Roth IRAs. The Tax Court mentioned that there was “no nontax business purpose or economic purpose for … Continue Reading
On Wednesday, July 1, I will be a co-panelist at the American Association of Attorney-Certified Public Accountants’ Annual Meeting and Education Conference held at the Hilton Branson Convention Center in Branson, Missouri. Topics discussed at the conference will include the US Expatriation Tax Regime, Integrated Estate Planning and the 2015 Federal Tax Update. My presentation, entitled “Exit Stage Left: … Continue Reading
According to the most recent estimates, the quantity of goods carried by containers has risen from around 100 million metric tons in 1980 to about 1.5 billion metric tons in 2012. Out of these numbers, one container in every 11 that is engaged in global trade is either bound for or originates in the United … Continue Reading
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
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
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
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
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
