International Tax Monthly

IRS Finalizes FATCA Regs on Requirements for Sponsoring Entities The final regs, which became effective on March 25, 2019, contain only limited revisions to proposed regs issued in 2017. FATCA, Generally The Hiring Incentives to Restore Employment Act of 2010 added Chapter 4 — that is, the FATCA — to the Internal Revenue Code. Under … Continued

Economic Substance Doctrine To determine whether a transaction has economic substance, courts usually make a two-pronged factual inquiry: The subjective test: Was the taxpayer motivated by no business purpose (other than getting tax benefits) in entering into the transaction? The objective test: Did the transaction have objective economic substance; in other words, was there a … Continued

Who’s a Qualified Individual? Section 911(a) and Sec. 911(c)(4) allow a “qualified individual” to exclude from taxation the individual’s foreign earned income and the housing cost amount. A qualified individual is one whose tax home is in a foreign country and who’s either a: U.S. citizen (or, in certain situations, U.S. resident alien) who satisfies … Continued

An Overview of the Proposed Regs on the FDII and GILTI Deduction BackgroundThe Tax Cuts and Jobs Act (TCJA) established a “participation exemption system” under which certain earnings of a foreign corporation can be repatriated to a corporate U.S. shareholder without U.S. tax. (This occurs under Internal Revenue Code Section 245A.) However, Congress recognized that, … Continued

Proposed Regs Set Out How To Determine FDII Determining FDII Under the proposed regs, a domestic corporation’s FDII would be the corporation’s deemed intangible income (DII) multiplied by the corporation’s foreign-derived ratio. A domestic corporation’s DII would be the excess (if any) of the corporation’s deduction eligible income (DEI) over its deemed tangible income return … Continued

Court Defines “Financial Interest” and Makes Other FBAR Rulings Under the Law Every U.S. citizen who has a financial interest in, or signature or other authority over, a financial account in a foreign country is required to report the account to the IRS annually. This is done by filing an FBAR. The Secretary of the … Continued

Our international tax consultants assist clients in taking advantage of the numerous business opportunities that exist worldwide. Here are some of services we provide:  Complete tax planning, return preparation and filing to ensure U.S. and foreign compliance.  Planning to maximize foreign tax credits.  Review of transactions to ensure transfer pricing compliance.  Assisting employees who work … Continued

Rule 155 Basics Where the parties have made mutual concessions resolving certain issues, the Tax Court normally directs that decisions will be entered under Tax Court Rule 155(a). It provides that, “[w]here the Court has filed … its opinion … determining the issues in a case, it may withhold entry of its decision for the … Continued

Primary Requirements Sec. 965 generally requires U.S. shareholders to pay a “transition tax” on the untaxed foreign earnings of certain specified foreign corporations (SFCs) as if those earnings had been repatriated to the United States. More specifically, Sec. 965(a) provides rules for the last tax year of a deferred foreign income corporation (DFIC) that begins … Continued

Background Under Sec. 988, a foreign currency gain is any gain from a Sec. 988 transaction to the extent the gain doesn’t exceed gain realized because of changes in exchange rates on or after the booking date and before the payment date. A foreign currency loss is any loss from a Sec. 988 transaction to … Continued