Published in International Taxation, Volume 13, Issue 3: September 2015.
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Insights
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Insights Vol. 2 No. 8: F.A.T.C.A. 24/7
/This month, Philip R. Hirschfeld and Galia Antebi report on Republican-led efforts to curtail F.A.T.C.A., new F.A.Q.’s released by the U.S. and Mauritius, publication of the St. Kitts and Nevis I.G.A., updated foreign account reporting procedures, and much more.
Read MoreCorporate Matters: Are You Doing Business in New York?
/Clients with entities formed in a state other than New York often ask if they should seek authority to transact business in New York. Typically, the client is concerned that operations in New York exist and a fear that often inhibits a company from pursuing registration is the expectation that registration brings with it New York State and New York City tax obligations. Simon H. Prisk reflects: The answer to these questions is not as clear cut as one might think.
Read MoreAlbermarle: Refund Claims Relating to Foreign Tax Credits
/We analyze a recent U.S. Court of Appeals case, Albemarle Corp. v. United States, that affirmed certain refund claims were barred by the statute of limitations. The case involved withholding taxes on payments of interest to Albemarle Corp. from its Belgian subsidiary during the years 1997 to 2001. The court held that the taxpayer’s claims for refunds, attributable to foreign tax credits, were time-barred in certain years.
Read MoreInadequate Gift Description – I.R.S. Tries for a Second Bite at the Apple
/What constitutes adequate disclosure? This topic continues to be a source of dispute between taxpayers and the I.R.S. Sheryl Shah and Nina Krauthamer discuss the statute of limitations consequences when a taxable gift that is not “adequately shown.”
Read MoreTemporary Regulations Alter C.F.C.'s Active Rents and Royalties Exception to Subpart F
/Newly issued temporary regulations (T.D. 9733) modify three of the six ways that rental or royalty income can qualify for the active exception to foreign personal holding company income (F.P.H.C.I.) under Subpart F. The new Treas. Reg. §1.954-2T addresses who can perform the required functions when a controlled foreign corporation (C.F.C.) leases or licenses property to an unrelated person, as well as the treatment of cost sharing arrangements.
Read MoreI.R.S. Proposed New Partnership Rules Under Code §956
/The I.R.S. recently released temporary and proposed regulations to limit the use of foreign partnerships to avoid income inclusions under Code §956. The Temporary Regulations are more limited in their scope while the Proposed Regulations are quite broad. If finalized in the current form, the Proposed Regulations would cause most C.F.C. loans to partnerships with related U.S. partners to be investments in U.S. property.
Read MoreNotice 2015-54 on Reallocation to Foreign Partners – The Beginning of the End?
/We address the I.R.S.’s latest attempt to shut down schemes to avoid U.S. taxation by cracking down on what some may have considered a loop-hole under applicable partnership rules. In Notice 2015-54, 2015-34 IRB 210 (8/06/2015), the I.R.S. announced that it intends to issue regulations that would change the nonrecognition rules on certain property contributions to partnerships and L.L.C.’s with foreign partners. The new regulations would require that income or gain attributable to property be taken into account by the U.S. transferor, either immediately or periodically. Regulations would also be issued under §§482 and 6662 of the Internal Revenue Code (the Code) that apply to controlled transactions involving partnerships to ensure appropriate valuation of such transactions.
Read MoreFinal Stages of B.E.P.S. Implementation and its Effects
/As the conclusion of the O.E.C.D.’s B.E.P.S. Project draws ever nearer, Rusudan Shervashidze examines domestic implementation efforts in a number of foreign countries and the unanticipated tax ramifications for multinational enterprises. In their attempts to meet these requirements, countries are making some of the most significant changes to international taxation policy that we have seen in decades.
Read MoreThe Past, Present, and Future of Luxembourg Special Purpose Companies
/Amid a global context of widespread budget deficits, it seems that politicians have finally discovered that multinational enterprises, entrepreneurs, and high net worth individuals have recourse to legal frameworks that allow for the tax efficient structuring of investments. This article addresses the evolution of international tax planning through the use of Luxembourg S.P.V.’s from its origins to its heyday and future prospects in light of ongoing discussions at the level of the O.E.C.D. and the European Commission.
Read MoreTax Planning for Indian Businesses Investing in the US – Part II→
/Published in Taxsutra: September 2015.
Read MoreIndian Businesses Investing in the US – Tax Challenges – Part I→
/Published in Taxsustra: September 2015.
Read MorePurchasing a Partnership/LLC Interest: Tax Tip #2 – Code Section 754 Election→
/Published by the American Bar Association in the Real Property Trust & Estate eReport, August 2015.
Read MoreInsights Vol. 2 No. 7: Updates & Other Tidbits
/As Democrats and Republicans attempt to revamp the U.S. tax system, there is renewed discussion of lowering the corporate tax rate. In other national news, U.S. expatriation numbers are down in Q2 of 2015, the I.R.S. Transfer Pricing Operations Unit is officially here to stay, and three more banks agree to disclose activities to D.O.J.
Read MoreInsights Vol. 2 No. 7: F.A.T.C.A. 24/7
/July and August were busy months for F.A.T.C.A. developments. We explain the highlights: The I.R.S. notified countries with early I.G.A.’s that more favorable provisions are available, but the notice may escalate the on-boarding controversy with Canada and the U.K. The Common Reporting Standard (C.R.S.) is moving forward – either with or without U.S. participation – and global F.I.’s must adjust reporting systems. Iceland and the United Arab Emirates publish F.A.T.C.A. guidance. Belarus ratified the I.G.A. with the U.S. Italy published an implementation decree for exchange of information. Turkey and Slovakia signed Model 1 I.G.A.‘s. Mauritius and Luxembourg extend local F.A.T.C.A. reporting deadlines.
Read MoreI.R.S. Plan to Reject Foreign Taxpayers' Refunds Criticized by I.R.S. Advisory Committee
/The I.R.S. proposal to deny refunds of excess withholding tax in cases were the withheld tax is stolen by the withholding agent was harshly criticized by the Information Reporting Program Advisory Committee. It seems the I.R.S. does not have the authority to pass the loss onto the party that suffered withholding. Elizabeth V. Zanet and Andrew P. Mitchel discuss the issue in detail.
Read MoreEuropean Commission, State Aid, and Tax Transparency – More Steps in One Direction
/The EDF experience in France demonstrates that State Aid in Europe comes in many forms, and it can be harshly treated when discovered. Beate Erwin looks at the case against France’s main electricity provider and other developments in the European Commission’s attack on State Aid through private tax rulings. She finds that the result in the EDF case is not an anomaly.
Read MoreArtificial Loan Restructurings
/The I.R.S. has discovered that related taxpayers have been renegotiating existing intercompany loans to allow operating companies within the group to pay a higher rate of interest to a related party benefitting from favorable tax attributes without violating Code §482 principles. Andrew P. Mitchel and Sheryl Shah explain how the I.R.S. is taking aim at this new approach to self-help.
Read MoreSumma Holdings, Inc. v. Comm'r
/Many advisers believe that the interest-charge Domestic International Sales Corporation (D.I.S.C.) is the last great international tax planning idea because a portion of the export profits are taxed at low rates for shareholders that are individuals. Some believe it is even better when the benefit is channeled to a Roth I.R.A. that provides tax forgiveness rather than tax deferral. But in a recent case won by the I.R.S., we see how too much of a good thing may be bad.
Read MoreInverted Corporate Giant May Be Eligible for U.S. Government Contracts
/Politicians have led us to believe that inverted corporations are not eligible for U.S. government contracts. However, the manufacturing giant Ingersoll-Rand has a different view and the Department of Homeland Security appears to be in agreement.
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