Deemed Repatriation of Deferred Foreign Earnings: Calculating Accumulated E&P and Transition Tax

Determining U.S Shareholders, Cash vs. Non-Cash Positions, Netting Provisions, and Mechanics of Reporting Repatriation Tax

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


Conducted on Wednesday, February 21, 2018

Recorded event now available

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Program Materials

This webinar will provide tax advisers with a practical guide to the deemed repatriation provisions of the new tax reform bill, with a focus on the specific compliance aspects of the requirement to recognize all post-1986 deferred foreign source income. The panel will go beyond the basics of what the law says to present compliance professionals with a detailed focus on calculations and the nuts-and-bolts of repatriation, including the leg-work of determining whether a client/entity qualified as a “U.S. shareholder” under the new definitions.

Description

The “deemed repatriation” provisions of the tax overhaul law present tax advisers to U.S. taxpayers engaged in foreign business and investment activities with an almost immediate compliance challenge. These deemed repatriation provisions, changes to the definition of who is a U.S. shareholder, and changes in attribution rules to determine CFC status, will impact 2017 filings. Tax advisers need to immediately grasp the details of the new provisions to avoid costly tax consequences for their clients engaged in cross-border activities.

The new law requires “U.S. shareholders” of “specified foreign corporations” (SFCs) to report and pay a one-time “transition tax” on previously untaxed accumulated E&P. These SFCs include all foreign entities qualifying as CFCs as well as other foreign corporations. For purposes of the new foreign tax regime, U.S. shareholder includes any U.S. domestic corporation, partnership, trust, estate or individual that directly, indirectly or constructively owns 10% or more of an SFC’s value or voting power. This represents a change in the type of taxpayer that must report foreign income.

The bill imposes separate rates for accumulated cash vs. non-cash retained E&P amounts, with cash positions subject to a higher rate. The law also allows taxpayers to net certain E&P positions, and to claim a percentage of foreign taxes attributable to the accumulated E&P, again at separate rates.

Listen as our expert panel provides a thorough and practical guide to the mechanics of identifying, calculating and reporting this transition tax under the deemed repatriation provisions of the tax overhaul bill.

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Outline

  1. U.S. shareholders subject to new foreign provisions
  2. Definition of “specified foreign corporations”
  3. Identifying and calculating accumulated E&P subject to deemed repatriation transition tax
    1. Cash positions
    2. Non-cash positions
    3. Netting provisions
    4. Exclusion for E&P accumulated prior to CFC/SFC status or U.S. shareholder status
    5. Areas awaiting IRS regulatory guidance
  4. Calculating tax
    1. Rates for cash positions
    2. Rates for non-cash positions
    3. Calculating eligible foreign tax credits

Benefits

The panel will discuss these and other important topics:

  • What differences in definition of U.S. shareholders and specified foreign corporations are included in the new law from prior provisions?
  • Identifying what is included in cash and non-cash accumulated E&P positions
  • Netting provisions
  • What areas and issues will require IRS regulatory guidance?

Faculty

Phelan, Kimberlee
Kimberlee S. Phelan, CPA, MBA

Tax Partner
WithumSmith+Brown

Ms. Phelan has more than 15 years of tax and accounting experience at national and regional accounting firms. Her...  |  Read More

Samtoy, John
John Samtoy

Tax Principal
Holthouse Carlin & Van Trigt

Mr. Samtoy’s practice specializes in international tax compliance and consulting services, with a focus on...  |  Read More

Santa, Mishkin
Mishkin Santa, JD LLM

International Tax Director
The Wolf Group

Mr. Santa focuses his practice on repatriation tax, as well as individual income tax compliance, estate, gift &...  |  Read More

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