New final regulations pose significant implications for possible income inclusions by U.S. corporations with foreign disregarded entities.
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Foreign Subsidiaries
Sec. 245A dividends-received deduction allowed for Sec. 78 dividend
In Varian Medical Systems Inc., the Tax Court found the company eligible for the deduction for 2018 despite a disqualifying change in Sec. 78, due a mismatch between the change’s effective date versus the effective date of then-new Sec. 245A.
Dual consolidated losses: Recapture considerations
An interesting issue can arise when a corporation must recapture dual consolidated losses on the sale of a foreign entity.
Pillar 2: Time for US multinational enterprises to act
Large U.S. multinationals can take steps now to assess the potential impact of the global top-up corporate tax system that appears on the verge of being implemented.
Gain recognition agreements: US corporation’s transfer of a foreign corporation followed by the foreign corporation’s disposition of its assets
This item discusses the use of GRAs to defer tax on the outbound transfer of stock to a foreign corporation.
Considerations for multinationals with US and Maltese operations
This discussion explores certain issues that multinationals should consider when deciding whether to use Malta as part of their worldwide operations.
GILTI and Subpart F treatment of distributions of appreciated property
Under the Subpart F regime, income subject to the regime is initially defined by what it includes, while under the GILTI regime, income subject to the regime is initially defined by what it excludes. This article discusses the application of these different approaches in the context of nonliquidating distributions from a controlled foreign corporation to a U.S. shareholder.
Transfer pricing and sales/use tax
This discussion outlines the basics of sales and use tax and transfer pricing, considers how intercompany transfer pricing may unintentionally lead to sales tax exposure, and offers steps to avoid audit assessments and penalties.
IRS finalizes rules for 100% dividends-received deduction, GILTI
The IRS issued final rules on the Sec. 245A extraordinary disposition rule and the Sec. 951A disqualified basis and disqualified payment rules, as well as reporting requirements to facilitate the rules.
Transfer pricing and the pandemic recession: What to do about it
MNEs will need to reevaluate their pre-pandemic
transfer-pricing approach based on an updated application of the arm’s-length principle and be prepared to defend changes in the approach and results.
Final rules coordinate Sec. 245A and Sec. 951A
The IRS issued final rules on the Sec. 245A extraordinary disposition rule and the Sec. 951A disqualified basis and disqualified payment rules, as well as reporting requirements to facilitate the rules.
IRS issues more rules on GILTI tax
The IRS issued final regulations under the GILTI rules on the treatment of income subject to a high rate of foreign tax. At the same time, the IRS issued proposed rules conforming the GILTI high-tax exception rules with the Subpart F high-tax exception.
Foreign income taxes deemed paid and the PTEP rules
Treasury and the IRS temporary regulations include rules for determining foreign income taxes
deemed paid under Sec. 960, which pertains to the “deemed paid” foreign tax credit.
FDII and GILTI regulations finalized
The IRS issued final regs. on the foreign-derived intangible income deduction and the global intangible low-taxed income provisions enacted by the TCJA.
Reducing GILTI liability using CFC accounting method change procedures
Methods of accounting may be an effective tool in tax planning for GILTI; however, method change procedures for CFCs differ from procedures for domestic taxpayers.
Taxpayer avoids Sec. 954(d)(1) Scylla but not Sec. 954(d)(2) Charybdis
A US company’s income earned by a Luxembourg
subsidiary from sales of products made by a Mexican branch of the subsidiary is taxable as foreign base company sales income under Subpart F.
Puerto Rico: A permanent tax deferral in a GILTI world?
Under the right set of circumstances, there may be a significant opportunity for tax savings in Puerto Rico.
Individual election to be taxed at corporate rates
Until now, shareholders had rarely invoked the Sec. 962 election to be taxed at corporate rates, and, as a result, most states have provided no specific guidance on how to treat a Sec. 962 election for state income tax purposes.
Crime doesn’t pay — and may be taxable under Subpart F
One potentially important component of Subpart F
income under Sec. 952(a)(4) is illegal bribes, kickbacks, or other payments made by or on behalf of a CFC to a foreign government official, employee, or agent.
Cross-border M&As post-TCJA: Three things advisers should know
This item highlights three often overlooked or misunderstood factors potentially disrupting international transactions.
employee benefits & pensions
Profits interests: The most tax-efficient equity grant to employees
By granting them a profits interest, entities taxed as partnerships can reward employees with equity. Mistakes, however, could cause challenges from taxing authorities.
