U.S. shareholders who own stock in foreign corporations were given a safe harbor by the IRS, making it easier for them to establish that they are not shareholders in a controlled foreign corporation.
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Foreign Subsidiaries
Demystifying the new international E&P rules
This discussion provides a summary of some of the basic previously taxed earnings and profits ordering rules likely to apply to distributions made by controlled foreign corporations .
Foreign-derived intangible income guidance addresses many open questions
Sec. 250 allows domestic corporations a deduction for their “foreign-derived intangible income.” Proposed regulations that were issued earlier this year answer many outstanding questions regarding the calculation of this new deduction but also include documentation requirements that may prove onerous for some taxpayers.
Treasury reverses position on qualifying income for RICs invested in certain foreign corporations
The final rule allows a RIC invested in CFCs and PFICs to treat the required CFC inclusion or PFIC inclusion respectively, as qualifying income for purposes of a RIC’s qualifying income test.
CFC worthless stock deductions after tax reform
This discussion focuses on the GILTI and BEAT implications for the benefit received by a U.S. corporation reporting a worthless stock deduction
under Sec. 165(g) for a CFC’s stock.
Final rules govern GILTI, Subpart F income, and foreign tax credits
The IRS issued final regulations on the Sec. 951A global low-taxed income inclusion and foreign tax credits, finalizing proposed rules issued in October and December 2018.
New CFC group election: Possible benefits
The TCJA substantially modified Sec. 163(j) so that the business interest expense in a tax year is limited to the sum of the taxpayer’s business interest income, 30% of the taxpayer’s adjusted taxable income, and the taxpayer’s floor plan financing interest.
International tax considerations for the blockchain industry
Delineating the international tax considerations for a blockchain enterprise, a new industry involving new technology with almost no regulatory guidance, can be difficult.
IRS issues Q&A guidance on Sec. 965 transition tax issues for 2018 returns
The IRS issues guidance for application of overpayments or refunds for taxpayers that opt to pay the Sec. 965 transition tax in eight annual
installments.
GILTI: A new age of global tax planning
Only after careful examination of GILTI can U.S. taxpayers assess whether the TCJA benefits or harms their foreign earnings.
Unintended consequences: How a drafting glitch turned Sec. 958 upside down
This item provides an overview of the Sec. 958 constructive ownership rules, explores the “glitch” and its consequences, and discusses planning options to mitigate the negative effects.
Missing links: Tax reform’s impact on the value chain
In a changing landscape, U.S. C corporation multinationals should consider reevaluating their value chain.
Considerations when computing tested income and tested loss of a CFC
This discussion focuses on the computation of tested income or loss and comments on the mechanics of the computation, clarifies common misconceptions, and uncovers snags that may catch unsuspecting practitioners who have little experience navigating the GILTI provision.
IRS issues guidance on REITs’ treatment of certain foreign income inclusions
Sec. 856(n)(1)(a) specifies that passive foreign
exchange gain (as defined in Sec. 856(n)(3)) for any tax year is not gross income for purposes
of Sec. 856(c)(2).
GILTI regime guidance answers many questions
This article discusses the GILTI regime and the rules in proposed regulations and some of the most notable implications.
Proposed GILTI regs. provide useful guidance on certain consolidated return issues
The proposed regulations effectively treat a consolidated group as a single entity for purposes of determining the sharing of tested loss.
U.S. corporate shareholders would no longer be subject to income inclusion rules
The IRS issued proposed regulations providing that Sec. 956, which requires an income inclusion by U.S. shareholders of controlled foreign corporations (CFCs) that invest in U.S. property, should not apply to corporate shareholders.
Global intangible low-taxed income rules are issued in proposed form
The IRS issued proposed regulations implementing Sec. 951A’s global intangible low-taxed income provision, which requires a US shareholder of a controlled foreign corporation to include this income in the shareholder’s gross income.
Move to territorial system may not discourage profit shifting
The shift to a territorial system was designed to help dissuade U.S. companies from moving profits overseas, but it may make the practice more rewarding instead.
Proposed rules would exempt corporate US shareholders from Sec. 956
The IRS issued proposed regulations providing that Sec. 956, which requires an income inclusion by U.S. shareholders of controlled foreign corporations (CFCs) that invest in U.S. property, should not apply to corporate shareholders.
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.
