Global Entity Structuring: U.S. Taxpayers Doing Business Abroad

U.S. or Foreign, Corporation or Pass-Through, FTCs, Treaty Provisions and Relief Under 962

Note: CLE credit is not offered on this program

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


Conducted on Thursday, June 11, 2020

Recorded event now available

or call 1-800-926-7926
Program Materials

This webinar will weigh the pros and cons of holding structure choices for foreign investments made by U.S. taxpayers. Our panel will explore the tax impact of entity choice as well as relief available for advisers working with taxpayers with global income.

Description

U.S. taxpayers are increasingly engaging in activities abroad. The most obvious considerations are whether to form the entity in the U.S. or another country and what type of entity to choose. Adding to the complexity of the decision are the many types of relief available for the taxation of foreign income in the U.S.

A U.S. entity pays tax on worldwide income while a foreign entity pays tax only on U.S. source income. Before tax reform, U.S. shareholders were taxed on Subpart F income (certain passive income and related party transactions) earned by CFCs. Now in addition to Subpart F taxation, Section 951A, GILTI, imposes a tax on net tested income earned by foreign companies. To ease taxation, Section 250A provides domestic corporations with a 37.5% tax deduction for FDII and a 50% deduction for GILTI. This creates an effective tax rate of 10.5% for GILTI and 13.125% for FDII. Additionally, there are benefits of foreign tax credits. Weighing the taxation on worldwide income against the benefits and burdens of being a foreign entity is complex.

Holding the investment individually seems to be a good idea when coupled with the 962 election to take advantage of the lower corporate rates. However, individuals aren't eligible for Section 959 relief from the second level of taxation when assets are distributed.

Listen as our panel of experts explains U.S. taxation of foreign income, anti-deferral rules including GILTI, Subpart F, and PFIC, and relief available by way of Section 962, foreign tax credits, and international treaties to help advisers make the best entity choice for businesses with earnings outside the U.S.

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Outline

  1. U.S. taxpayers defined
  2. Foreign entities
    1. Default classifications and electing out
    2. Subpart F
    3. PFICs
    4. GILTI
  3. Treaty provisions
  4. U.S. business entities
    1. PTEs and C corporations
    2. Section 959 relief from double taxation
  5. Holding as individual
    1. Sec 962 election to be taxed as corporation
  6. Foreign reporting requirements

Benefits

The panel will review these and other critical issues:

  • When being taxed in the U.S. on worldwide income may be the best choice
  • When to elect to be taxed at the corporate rate under Section 962
  • What treaty relief is available for double taxation
  • When non-tax considerations outweigh tax benefits
  • How foreign tax credits impact the choice of entity

Faculty

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

Director, Tax Services
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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