Taxpayers will be required to consistently value transfer-pricing transactions for purposes of all Code sections under rules issued by the IRS.
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Topics
Income & Exclusions
Sec. 962 to the Rescue
International tax provisions, including the anti-deferral regime and mechanics of the foreign tax credit, can present significant and unique challenges to maintaining a tax-efficient structure.
Sec. 956 and Subpart F Inclusions, Actual Distributions, and Previously Taxed Income
Previously taxed income rules were designed to prevent double taxation of a controlled foreign corporation’s earnings. Keeping track of a foreign corporation’s earings and profits under the rules can be complicated.
Regs. Tighten Form 5472 Filing Requirements
The IRS is amending the rules for filing Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business.
Foreign Corporations: Procedures and Pitfalls in Adopting and Changing Methods of Accounting for Purposes of Determining E&P
This item provides a high-level discussion of the general timing for certain foreign corporations’ adoption of methods of accounting for purposes of determining E&P, the procedural rules regarding how such foreign corporations change their method of accounting, and the importance of understanding when and how a method is adopted in light of the increased limitations such foreign corporations may face in changing methods.
Transfer-Pricing Documentation: Possible Relief Ahead for Small Multinational Companies
Organisation for Economic Co-operation and Development guidance could offer cost savings to multinational companies, particularly small and compliant ones.
Dealing With the Secondary U.S. Tax Consequences of Transfer-Pricing Adjustments
This article explains how a transfer-pricing adjustment triggers secondary financial consequences in a multinational group.
Potential U.S. Tax Consequences of Using Foreign Sales or Manufacturing Branches
The IRS late last year released final regulations on the rules for foreign base company sales income (FBCSI) under Sec. 954(a)(2) and Regs. Sec. 1.954-3(b).
Interaction of the Subpart F Dual-Character Property and Majority-Use Rules
When a controlled foreign corporation (CFC) sells property used in its active business, any gain generally is not treated as subpart F income includible in its U.S. shareholders’ taxable income.
IRS and OECD Separately Address Transfer Pricing Issues
The IRS announced a reorganization of its advance pricing agreement (APA), mutual agreement, and competent authority programs into one new program.
Cost-Sharing Agreements and the Arm’s-Length Standard
The Xilinx case has created turmoil in the international tax community for quite some time, and there is no clear end in sight. Although the Ninth Circuit reversed its controversial decision, uncertainty surrounds the validity of Treasury’s new regulations explicitly requiring that cost sharing include stock options.
The Software Regulations and Subpart F
The proper U.S. tax treatment of a sale or license of computer programs through a foreign subsidiary is challenging and potentially expensive in cash taxes. A practitioner must consider a variety of aspects and value exchanged in transactions and transfers when assessing transactions in software.
Initial IRS Guidance Addressing EU Cap-and-Trade Systems, Subpart F Rules
In Letter Ruling 200825009, the IRS addressed for the first time the subpart F treatment of gains on sale of surplus carbon dioxide (CO2) emissions allowances.
Subpart F and the New Contract Manufacturing Regs.
Final regulations were issued on the application of the manufacturing exception to certain contract manufacturing arrangements—arrangements where a CFC does not itself perform the manufacturing but instead contracts with a third party to perform the manufacturing.
New Subpart F Regs. Address Manufacturing Exception and Branch Rules
Treasury published final, temporary, and proposed regulations under Sec. 954 addressing the treatment of contract manufacturing arrangements and the branch rules applicable to foreign base company sales income (FBCSI), a type of subpart F income applicable to the sale of inventory.
CPM: The World’s Transfer Pricing Method
The comparable profits method has emerged as the dominant transfer pricing method among multinational companies today due to its widespread acceptance by taxing authorities around the world, its administrative ease of use, and, often, opportunities for tax rate reduction.
Individuals’ Use of Offshore Holding Companies (Part I)
This article provides an overview of the controlled foreign corporation anti-deferral regime as it relates to “portfolio-type investments” through a foreign holding company structure and the statutory deterrents to using such a structure.
Changes to Subpart F Services “Substantial Assistance” Test
Editor: Terence E. Kelly, CPA Subpart F of the Code provides that U.S. taxpayers doing business through the use of certain controlled foreign corporations (CFCs) may be subject to current income inclusion when a CFC derives foreign base company services income (FBCSI). FBCSI generally includes income from services a CFC
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.
