Hot Issues in U.S. International Taxation

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Hot Issues in U.S. International Taxation

195.00

May 2017 in Houston, Texas

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Hot Issues in U.S. International Taxation Binder

Table of Contents

Expense Apportionment Practice Update

  • How expense apportionment affects credits foreign taxes and deduction of U.S. expenses
  • Selecting the best apportionment method - gross-to-gross v. factual apportionment
  • Understanding the rules for interest apportionment – effect of exchange rates on foreign asset bases
  • Strategies for minimizing the apportionment of research, state tax and S,G&A expenses to foreign source income

Alexander Hanhan, Tax Managing Director, KPMG LLP, Houston, TX
Eric Tyan, Senior International Tax Manager, KPMG LLP, Houston, TX
Sean Majied, Senior International Tax Manager, KPMG LLP, Houston, TX


Computing Direct and Indirect Foreign Tax Credit Benefits

  • Obtaining foreign tax credit benefits for foreign withholding taxes – what constitutes a creditable income tax
  • Applying the gross-up formula for foreign taxes
  • Computing the separate foreign tax credit basket limitations - separate limitation loss recapture
  • Applying the related party look-through rules for dividend and interest payments between related CFCs and 10/50 entities
  • How FTC limitations increase the US tax on dividends under Subpart F and Sec. 956
  • Section 901 (m) covered asset acquisition rules

John Woodruff, Shareholder, Polsinelli LLP, Houston, TX

How the Subpart F Anti-Tax Deferral Rules Operate

  • Identifying CFCs and “U.S. Shareholders”
  • Definition of U.S. shareholder - vote or value ownership
  • Understanding the regulations involving Subpart F FPHC income
  • Working with the branch rules for foreign sales and manufacturing activities
  • Exceptions and limitations on application of the Subpart F rules
  • Avoiding investments in U.S. property by first or lower-tier CFCs

Amanda Swartz, Tax Associate, Baker & McKenzie LLP, Houston, TX


Transfer Pricing Developments

  • Impact of IRS administrative changes on transfer pricing, APAs and Competent Authority cases
  • Developments in cost-sharing, intellectual property and regulatory developments
  • Update on BEPS and transfer pricing
  • Proposed country by country reporting regulations, changes to Section 482 aggregation rules and the treatment to outbound transfer under sections 367 and 721

Kristin Yoshida, Principal, Tax, Economic & Valuation Services, KPMG LLP, Houston, TX

Final Regulations under Section 987

On 7 December, the Treasury and IRS issued the long-awaited final, temporary and proposed regulations under Section 987. The final regulations outline how owners of a qualified business unit (QBU) subject to Section 987 must determine the QBU’s taxable income or loss, as well as the timing, amount, character, and source of any Section 987 gain or loss.  Both the final and temporary regulations are generally effective for tax years beginning in 2018, but taxpayers may apply the new rules starting in 2017.  The presentation will address the key provisions of the final, temporary and proposed regulations and address transitional considerations as taxpayers look to adopt the final regulations.

Mia Bertagnolli, International Tax Manager, Ernst & Young LLP, Houston, TX
Matt Zimmer, Senior International Tax Manager, Ernst & Young LLP, Houston, TX

International Tax Reform & the New Section 385

·         On 13 October 2016, the US Treasury Department (the Treasury) and the Internal Revenue Service (the IRS) released final and temporary regulations under Internal Revenue Code Section 385 (TD 9790, the Final Regulations), which follow the release of extremely controversial proposed regulations by just six months (REG-108060-15, the Proposed Regulations). In response to comments, the Final Regulations significantly narrow the scope of the Proposed Regulations.

·         Like the Proposed Regulations, the Final Regulations target instruments issued to a member of the issuer’s “expanded group” that would otherwise constitute indebtedness for US federal tax purposes under common law principles. The Final Regulations establish extensive documentation requirements that must be satisfied for a debt instrument to constitute indebtedness for US federal tax purposes (the Documentation Rule) and recharacterize a debt instrument issued after 4 April 2016, as stock if the instrument is: (i) issued in one of a number of specified transactions (tainted transactions), or (ii) funds a tainted transaction (the Recharacterization Rule).

·         The presentation will also provide a general update on current proposals of U.S. tax reform by the House of Representatives.

Mike Masciangelo, Tax Partner, Ernst & Young LLP, Houston, TX
Adam Province, International Tax, Ernst & Young LLP, Houston, TX

International Mergers and Acquisitions under Sec. 367

  • Application of U.S. targets with foreign subsidiaries and foreign multinationals acquiring U.S. targets
  • Working with the new rules for the transfer of foreign tangible and intangible assets - Secs 367(a) and 367(d)
  • International stock transfers and inversions under Sections 367(a) and Section 7874
  • Application of Sec. 367(b) to inbound and foreign-to-foreign stock transfers – deferral of negotiation of Sec. 1248 E&P
  • Application of New Section 385 Regulations to intercompany debts

Matt Mauney, Tax Associate, Baker & McKenzie LLP, Houston, TX