New IRS Final 863(b)(2) Regulations for Income Sourcing of Inventory Sales and Disposition of Partnership Interests

Determining Taxable Income, Books and Records Election, Adjusted Basis in Assets; Avoiding Double Taxation

A live 90-minute premium CLE/CPE video webinar with interactive Q&A


Thursday, January 21, 2021

1:00pm-2:30pm EST, 10:00am-11:30am PST

Early Registration Discount Deadline, Friday, December 18, 2020

or call 1-800-926-7926

This CLE/CPE webinar will provide tax professionals and advisers guidance on the IRS final Section 863(b)(2) income sourcing regulations. The panel will discuss key provisions of the final regulations, rules for determining the location or existence of production activity, measuring the adjusted basis of production assets, anti-abuse rules, and utilizing tax treaties to avoid double taxation. The panel will also discuss the impact of Sec. 863(b)(2) final regulations on sourcing for sales of purchased inventory under Sec. 865(e)(2) and other IRC provisions.

Description

The IRS issued final regulations under Section 863(b)(2), providing rules that significantly alter methods in determining the source of income associated with the sale or exchange of inventory produced within the U.S or abroad. Taxpayers and tax professionals must understand the implications of the new sourcing rules and their interplay with other Code provisions.

Section 863(b) provides for allocation or apportionment of income from the sale or exchange of inventory property produced by a taxpayer within the U.S. and sold or exchanged outside the U.S., or vice versa. The sourcing of taxable income under the final regulations appears to be based on the inventory's location and production activities.

The final regulations provide guidance on determining the source of income from sales by nonresidents with an office or place of business maintained in the U.S. and also modify rules for determining whether foreign-source income is effectively connected with the conduct of a trade or business.

Tax professionals must carefully consider these new rules with other Code provisions, such as Section 865(e)(2). Both Sec. 863(b)(2) and Sec. 865(e)(2) provide rules for determining the source of income from sales of inventory, which may overlap in certain circumstances.

Listen as our panel discusses key provisions of the final Sec. 863(b)(2) regulations, rules for determining the location or existence of production activity, measuring the adjusted basis of assets, and the impact of final regulations on sourcing for sales of purchased inventory under Sec. 865(e)(2) and other Code provisions.

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Outline

  1. Key provisions of Sec. 863(b)(2) final regulations
  2. Interplay with Sec. 865(e)(2) and other Code provisions
  3. Determining the location and existence of production activity
  4. Disposition of partnership interests
  5. Anti-abuse rules
  6. Best practices for taxpayers, tax counsel, and advisers

Benefits

The panel will review and other key issues:

  • What are the principal provisions and remaining issues of the Sec. 863(b)(2) final regulations?
  • What are high priority taxpayer considerations for sales of inventory in light of the new regulations?
  • What is the impact on the disposition of partnership interests?
  • What are the rules for determining the location or existence of production activity for income sourcing purposes?
  • How do you measure the adjusted basis of production assets?
  • How do the anti-abuse rules apply?
  • How can taxpayers utilize tax treaties to avoid double taxation?

Faculty

Rensen, Marissa
Marissa Rensen

Managing Director
KPMG US

Ms. Rensen is a managing director in KPMG’s Washington National Tax's International Tax practice. At KPMG,...  |  Read More

Tonkovich, Julia
Julia M. Tonkovich

Principal
Ernst & Young

Ms. Tonkovich practice in the area of inbound taxation includes planning and compliance involving the Tax Cuts and Jobs...  |  Read More

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