section 951A
Subscribe to section 951A's Posts

Weekly IRS Roundup August 31 – September 4, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 31, 2020 – September 4, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. September 1, 2020: The IRS released for publication in the federal register final regulations providing additional guidance on the base erosion and anti-abuse tax (BEAT) imposed on certain large corporate taxpayers with respect to certain payments made to foreign related parties. The final regulations affect corporations with substantial gross receipts that make payments to foreign related parties. September 1, 2020: The IRS announced the launch of the Bipartisan Budget Act (BBA) Centralized Partnership Audit Regime webpage. The Centralized Partnership Audit Regime replaces the Tax Equity and Fiscal Responsibility Act (TEFRA) and the electing large partnership rules. The centralized partnership...

Continue Reading

Weekly IRS Roundup August 10 – August 14, 2020

Presented below is our summary of significant Internal Revenue Service (IRS) guidance and relevant tax matters for the week of August 10, 2020 – August 14, 2020. Additionally, for continuing updates on the tax impact of COVID-19, please visit our resource page here. August 10, 2020: The IRS published corrections to a notice of proposed rulemaking related to section 245A(e) (Hybrid Dividends) that was published in the Federal Register on April 8, 2020. The notice contained proposed regulations that adjust hybrid deduction accounts to take into account earnings and profits of a controlled foreign corporation that are included in income by a US shareholder. The corrections are effective on August 11, 2020. August 10, 2020: The IRS published corrections to final regulations from Treasury Decision 9896 that were published in the Federal Register on Wednesday, April 8, 2020. The final regulations provide guidance regarding hybrid dividends and certain amounts paid...

Continue Reading

Bring That CFC on Home: Domesticating Individually-Owned CFCs After Tax Reform

Several changes in tax reform have a disparate impact on non-corporate US shareholders of foreign corporations compared with their corporate counterparts. Many such non-corporate shareholders face an expensive tax increase. They may attempt to mitigate this increase by transferring their shares to a US corporation or making a Section 962 election. This article examines the new rules governing US individuals who own foreign corporations and discusses the most significant recent changes, including a lack of participation exemption for US individuals who own foreign corporations and a higher transition tax rate. It further outlines new options for domestication of such foreign corporations. Continue Reading. Originally published in Bloomberg BNA Daily Tax Report – October 26, 2018 – Number 205.

Continue Reading

Deference Provided to Regulations When There’s a Drafting Error

The Tax Act created two new foreign tax credit limitation baskets – one for foreign branch income (new section 904(d)(1)(B)) and one for any amount includible in gross income under section 951A (i.e., GILTI) – however, it failed to amend section 904(d)(2)(H)(i) to reflect these changes to section 904(d)(1). As a result of this oversight, section 904(d)(2)(H)(i) currently instructs the taxpayer to treat foreign taxes imposed on amounts that do not constitute income under US principles as imposed on income described in the foreign branch income basket. In light of legislative history and Treasury regulations, such a failure to amend the Code appears to be a drafting error. This article addresses the relevant case law that, on balance, supports applying section 904(d)(2)(H)(i) as if its language and cross-reference had been properly amended. Access the full article.

Continue Reading

Expansion of Subpart F under the Tax Reform Act

Under Subpart F, certain types of income and investments of earnings of a foreign corporation controlled by US shareholders (controlled foreign corporation, or CFC) are deemed distributed to the US shareholders and subject to current taxation. The recent tax reform legislation (Public Law No. 115-97) increased the amount of CFC income currently taxable to US shareholders, and expanded the CFC ownership rules, which means more foreign corporations are treated as CFCs.   Continue Reading.

Continue Reading

STAY CONNECTED

TOPICS

ARCHIVES