80/20 Companies and Foreign-Source Income: State Treatment

Navigating States' Tests for Shielding Income and Claiming Deductions

Recording of a 110-minute CPE/CLE webinar with Q&A

Conducted on Thursday, October 21, 2010

Recorded event now available

or call 1-800-926-7926
Program Materials

This CLE webinar will update tax professionals and advisors on the current treatment of foreign-source income and dividends, including 80/20 structures, by state legislatures, revenue agencies and courts.


Notwithstanding the pending elimination of federal tax benefits for non-grandfathered 80/20 companies, the structure remains recognized by many states. Wide variations persist in how these states treat 80/20 companies and foreign-source income and dividends generally.

State laws and regulations are complex and their tests differ as to how companies that set up an 80/20 entity with most of their payroll or property in a foreign country can shield their income from taxation and/or deduct their inter-company royalties, dividends, services, etc.

80/20 companies are an example of the variations in the broader state treatment of income and dividends attributable to foreign business activities. Corporate tax professionals must stay up to date on current legislative, regulatory and court developments in this area to adjust accordingly.

Listen as our panel of experienced tax advisors reviews the evolving landscape of state tax treatment of foreign business activities.



  1. General environment, state treatment of foreign source income
    1. Examples of state laws and regs regarding:
      1. Foreign source income
      2. Foreign operating corporations
      3. Dividends from foreign entities
      4. Royalties and interest paid to foreign companies
      5. Intra-group service payments
      6. State tests for allowing exclusions and deductions
  2. State treatment of 80/20 companies
    1. Examples of state laws and regs regarding:
      1. Apportionment or other tests
      2. Method for establishing an 80/20 entity
  3. Tax planning issues for multi-state companies to address


The panel will explore state treatment of:

  • Foreign-source income and income from foreign operating corporations.
  • 80/20 company income and deductions.
  • Subtractions of dividends paid by foreign entities.
  • Royalties and interest paid to foreign corporate parents.
  • Other relevant tax compliance and planning aspects.


Joe Neff
Joe Neff
National Managing Director, State and Local Tax
RSM McGladrey

He leads and directs the firm's state and local tax services efforts and consults with some clients on SALT matters. He...  |  Read More

Mitchell Newmark
Mitchell Newmark

Of Counsel
Morrison & Foerster

He focuses on state and local tax litigation and appeals, and represents clients on such tax issues in M&A and...  |  Read More

Pilar Mata
Pilar Mata

Sutherland Asbill & Brennan

She specializes in state and local tax and works on tax controversies at the audit, administrative, trial and appellate...  |  Read More

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Strafford will process CLE credit for one person on each recording. All formats include program handouts. To find out which recorded format will provide the best CLE option, select your state:

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