The Supreme Court upheld the mandatory repatriation tax as a valid exercise of Congress’s taxing authority. The Court did not reach the question of whether income must be realized to be taxable.
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International Tax
Taxpayer-initiated transfer pricing adjustments in MAP
When multinational enterprises proactively initiate transfer pricing adjustments to avoid penalties or for other reasons, a tax treaty’s mutual agreement procedure (MAP) can help prevent double taxation, but additional issues should be considered.
IRS steps up enforcement of the individual expatriation tax
The Sec. 877A exit tax applies to specified expatriating U.S. citizens and long-term residents on gains from a deemed sale of assets. Expatriates’ numbers have risen, and the IRS is emphasizing compliance.
E-invoicing mandates and intercompany transactions
Value-added tax increasingly entails mandatory use of electronic invoicing and other “continuous transaction control” systems — even for intercompany transactions.
Trends in enforcement of VAT remote-seller rules
Guidelines have emerged for assessing value-added taxes in the global digital economy, although jurisdictions employ their own approaches to enforcing them.
Foreign trust transactions and large gifts addressed in proposed regs.
The proposed regulations implement Secs. 643(i), 679, 6039F, 6048, and 6677, which were added or modified to prevent efforts by U.S. taxpayers to use foreign trusts and offshore arrangements to avoid U.S. taxes.
Sec. 338(g) elections for foreign corporations and ‘creeping acquisitions’
Electing a qualified stock purchase can offer advantages when acquiring a foreign target corporation but also present a pitfall when it is done in stages.
State income tax considerations for non-US corporations
Foreign corporations operating in the United States need to be aware of state income tax rules, including those involving nexus, determining state taxable income, and filing methods.
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.
Off the BEAT-en path: Planning opportunities
Three scenarios model planning strategies for managing the Sec. 59A base-erosion and anti-abuse (BEAT) tax.
Offshore and out of mind: Reporting foreign assets and gifts
This article provides an overview of the federal tax reporting requirements by U.S. persons for foreign assets and gifts, including addressing prior noncompliance.
Recapture of foreign loss does not exempt other gain from tax
Gain on the disposition of controlled foreign corporation stock, in excess of the amount of gain required to be recognized as foreign income to offset a taxpayer’s overall foreign loss under Sec. 904(f)(3), is not exempt from tax.
Increased U.S. transfer-pricing enforcement: What’s at stake?
Multinational enterprises can expect an IRS encouraged by a string of court victories in recent years to more closely scrutinize transfer pricing and perhaps assert hefty penalties.
Short-term relief for foreign tax credit woes
The IRS has eased some requirements of final regulations published in 2022, by temporarily removing so-called attribution requirements and the specific-cost-recovery requirement.
Supreme Court hears arguments in challenge to Sec. 965 transition tax
At stake is up to $340 billion in tax revenue in case where couple is challenging tax that they say increased their liability by about $15,000 in 2017.
Foreign corporations, controlled groups, and the gross receipts test
Major tax law changes in 2017 increased reliance on the gross receipts test and, in turn, the controlled group rules, making these sections a focal point for tax practitioners.
Recovery of excess FICA taxes paid for foreign employees
Chief Counsel Advice memorandum 202323005 centers on whether an employer is eligible to receive a refund for an overpayment of FICA tax paid on behalf of an employee on a foreign assignment in a year after the calendar year in which wages were paid, without the employer’s first repaying or reimbursing the employee the employee’s portion of Social Security tax.
Rethinking international penalty administration
This item explores the Farhy decision and its impact on international penalties.
Aggregation rules affecting foreign-owned companies
Multinational businesses should carefully consider whether the aggregation rules may trigger the application of unfavorable tax rules for their U.S. subsidiaries.
FBAR reporting requirement is not unconstitutional
FBAR requirement does not violate Fourth, Fifth, Ninth, or Tenth amendments to the Constitution.
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.
