Description

As a boutique international tax advisory firm, we’re finding international tax issues arising for individuals and companies of all sizes. Many of them never thought they’d have any cross-border activities. We thought it might be helpful to do a series of discussions on International Tax for the Non-Specialist. They are overviews designed to assist practitioners and taxpayers identify issues. The overviews dive into some level of detail, but we envision separate sessions to more fully explain various technicalities.

1. There is no need to view the presentations in any particular order. This discussion is #5 in the series, following:
2. On tax residency and foreign financial account disclosures [FBAR / FinCen 114 / Form 8938];
3. On earning foreign income and an employee being transferred to a foreign affiliate [including the foreign earned income and housing exclusions];
4. On the anti-deferral rules of Subpart F and identifying a controlled foreign corporation (CFC); and
5. On US income taxation of Nonresidents.

This particular presentation focuses on Internal Revenue Code §956, Investment of Earnings in US Property. To ensure all viewers have at least the same minimal level of background, the presentation briefly reviews the general CFC / US Shareholder rules and various types of income and investments Congress considers “tainted” and therefore deemed distributed to the US owners. This includes, but is not limited to:

• Types of US investments by a CFC that are / are not tainted.
• Common real life examples of unintentionally falling into §956, including how something as simple as borrowing funds from a US bank could cause problems.
• Examples to help you calculate and understand the tax impact.
• An overview of PTEP (previously taxed E&P).
• Discussion of a subsequent cash distribution.

Course Key Concept: International tax, Global tax, Resident Alien, Controlled foreign corporation, CFC, US Shareholder, Subpart F, Anti-deferral, Section 951, Section 956, Section 957, Deemed dividend, TCJA, US person, E&P, Earnings and profits, PTEP / PTI, Previously tax income, Previously taxed E&P.