Calculating and Reporting Foreign E&P: Categorizing PTEP, Form 5471 Schedules H, P & R, Foreign Tax Credits

Note: CLE credit is not offered on this program

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


Conducted on Tuesday, July 13, 2021

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Program Materials

This webinar will discuss the complications surrounding the determination of foreign earnings and profits (E&P) for controlled foreign corporations (CFCs). Our panel of foreign tax experts will discuss the complexities of the related calculations, including categorizing income, handling retroactive adjustments, and reporting foreign E&P on Form 5471 Schedules H, P, and the newly added R.

Description

Tracking foreign E&P is essential to determining the taxation of distributions, current and previously taxed earnings and profits, and available foreign tax credits. Although foreign E&P is not defined, IRC Section 964 explains how it is calculated--substantially like a domestic corporation's E&P. The accompanying regulations provide guidelines for the differences between the two.

The regulations outline the three-step approach to calculating E&P:

Step 1. Prepare a local country profit and loss statement for the year from the books of account regularly maintained by the corporation for accounting to its shareholders.

Step 2. Make the accounting adjustments necessary to conform the foreign profit and loss to U.S. GAAP.

Step 3. Make the further adjustments necessary to conform the U.S. GAAP profit and loss to certain U.S. tax accounting standards.

Complicating the three-step process are the foreign currency adjustment requirements, retroactive adjustments from recent tax acts, and separating previously taxed earnings and profits into categories. Applying the regulations and complying with numerous reporting requirements can be overwhelming for international tax practitioners.

Listen as our panel of international tax experts guides you through calculating and reporting foreign E&P for CFCs.

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Outline

  1. Foreign E&P: introduction
  2. Calculating
  3. Ordering rules
  4. Current
  5. Previously taxed earnings and profit
  6. Foreign tax credits
  7. Retroactive allocations
  8. Reporting

Benefits

The panel will cover these and other key issues:

  • Reporting distributions on new Schedule R, Form 5471
  • How retroactive adjustments for 163(j), QIP, and other tax act changes affect foreign E&P
  • Categorizing previously taxed earnings and profits
  • Reporting foreign E&P on Schedules H and P of Form 5471
  • Notice 2019-01 and the ordering rules

Faculty

Dougherty, Alison
Alison N. Dougherty, J.D., LL.M., CPA

Partner
Aronson

Ms. Dougherty specializes in U.S. international tax reporting, compliance, consulting, planning, and structuring as a...  |  Read More

McCormick, Patrick
Patrick J. McCormick, J.D., LL.M.

Partner
Culhane Meadows Haughian & Walsh

Mr. McCormick specializes in the areas of international taxation, tax compliance, and offshore reporting...  |  Read More

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