Leveraging Earnings-Stripping Regs for Foreign Investments: Maximizing Tax Savings, Minimizing IRS Scrutiny
Recording of a 110-minute CPE webinar with Q&A
This course will provide tax professionals and advisors with an in-depth analysis of Sect. 163(j) regulations and guidance, explore frequently faced decisions involving interest deductions, and outline key strategies.
Outline
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Overview IRC 163(j)
- Deferral of deduction for interest payments, if no U.S. tax paid on interest
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Disqualified interest expense test
- To related parties not subject to U.S. income tax on interest
- To unrelated parties if there is disqualified guarantee of debt and interest not subject to U.S. tax
- Interest paid to REIT by taxable REIT subsidiary
- Debt-to-equity ratio safe harbor
- Cash flow safe harbor
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Government scrutiny of earnings stripping
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Important earnings stripping facets
- Using deductible interest or royalties, U.S. company makes deductible payments to parent
- Depending on parent location, U.S. earnings may be taxed at very low rate
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Important earnings stripping facets
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Important Legal Developments
- Tyco, U.S. Tax Court
- PepsiCo, U.S. Tax Court
- Scottish Power Ltd., U.S. Tax Court
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Planning Strategies available with Sect. 163(j)
- New Wrinkles
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Compliance
- Form 8926 (disqualified corporate interest expense disallowed under Section 163(j) and related information)
Benefits
The panel will review these and other key questions:
- Material terms of the 163(j) regulations and administrative guidance with which you must be familiar.
- Cases such as the Tyco, PepsiCo Inc. and Scottish Power Ltd. litigation in U.S. Tax Court and lessons you should draw from them.
- Form 8926: Best practices for making computing and reporting decisions regarding disqualified interest.
- Impact of continued federal scrutiny of earnings stripping and proposed changes to rules.
Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.
Faculty
Susan Conklin
Director, U.S. Inbound International Taxes at PwC
PWC
Ms. Conklin is assigned to the firm's Washington National Tax Services practice and advises foreign multi-nationals... | Read More
Ms. Conklin is assigned to the firm's Washington National Tax Services practice and advises foreign multi-nationals on complex U.S. federal income tax issues. Her work extends into tax compliance, legislative developments, regulatory and tax treaty issues, and restructurings.
CloseMatthew P. Moseley
Alston & Bird
Mr. Moseley has a practice focused on the U.S. federal income tax consequences of domestic and cross-border business... | Read More
Mr. Moseley has a practice focused on the U.S. federal income tax consequences of domestic and cross-border business transactions. Mr. Moseley has experience in international transfer pricing matters, including the transfer of intellectual property, structuring the acquisition or disposition of U.S. or foreign business entities, planning international reorganizations, and determining the applicability of U.S. tax treaties. He has prepared and negotiated cost-sharing agreements, assisted clients in obtaining advanced pricing agreements and guided clients through the process of seeking competent authority relief. He has advised clients regarding controversies during the audit process, on administrative appeal and through alternative dispute resolution proceedings.
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