New IRS Regulations of Cloud Transactions and Digital Content: Sourcing Rules, Lease vs. Services Tax Treatment

A special 75-minute briefing

A live 75-minute premium CLE/CPE webinar with interactive Q&A


Thursday, December 5, 2019

1:00pm-2:15pm EST, 10:00am-11:15am PST

Early Registration Discount Deadline, Friday, November 8, 2019

or call 1-800-926-7926

This CLE/CPE webinar will provide tax counsel and advisers a detailed analysis of the taxation of cloud transactions and digital content. The panel will discuss applicable IRS tax rules and recent regulations, sourcing of income rules and challenges, treatment of payment of services versus lease payments, treatment of fees for the right to use digital content, issues presented by the BEAT, GILTI and FDII rules, and other vital items impacting taxpayers engaging in cloud transactions and digital content.

Description

On Aug. 9, 2019, the IRS released regulations addressing the classification of "cloud transactions" and "transactions involving digital content" under the source of income rules of the Internal Revenue Code. Tax professionals must understand critical issues regarding the tax treatment of cloud transactions and digital content to properly advise and implement planning techniques to minimize tax liability to taxpayers.

The IRS generally treats cloud transactions as payments for services as opposed to a lease of property. However, some transactions, such as digital downloads or content transfers, could be classified as a lease of property under some circumstances. Tax professionals must also grasp crucial factors in determining classification as services versus leases and the tax treatment of each category.

The regulations have significant implications on cross-border transactions, providing that the source of income from digital transactions as being the place where the download of the digital content occurred, potentially subjecting taxpayers to multijurisdictional tax obligations. Furthermore, taxpayers must also consider the impact of other federal tax provisions, such as the base erosion anti-abuse tax (BEAT) regime, the U.S. tax treatment under the "controlled foreign corporation" (CFC) regime, and the new foreign-derived intangible income (FDII) regime.

Listen as our panel discusses key provisions and challenges of the recent regulations on cloud transactions and digital content, IRS treatment of payment of services versus lease payments, unresolved issues stemming from BEAT, GILTI, and FDII rules, and other essential items impacting taxpayers engaging in cloud transactions and digital content.

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Outline

  1. Recent IRS regulations and applicable tax rules
  2. Sourcing of income rules and challenges
  3. IRS treatment of payment of services, lease payments, and rights to use digital content
  4. Tax implications of BEAT, GILTI, and FDII rules in relation to cloud transactions and digital content
  5. Best practices for tax counsel and advisers to ensure tax compliance for cloud transactions and digital content

Benefits

The panel will review these and other key issues:

  • Recent IRS regulations covering the tax treatment of cloud transactions and transfers of digital content
  • Lease vs. services treatment in cloud transactions
  • Digital content transfers and the tax treatment of payments for the purchase of or the right to use software or other digital content
  • Sourcing rules and pitfalls to avoid unnecessary tax liability
  • Additional federal income tax implications; BEAT, treatment of CFCs, FDII

Faculty

de Ruig, David
David N. de Ruig

Senior Manager - National Tax - International Tax Services
Ernst & Young

Mr. de Ruig recently joined EY’s National Tax ITS practice in the Silicon Valley, where he focuses on a...  |  Read More

Perryman, Zachary
Zachary Perryman
Senior Manager - National Tax - International Tax Services
Ernst & Young

Mr. Perryman is a senior manager in EY’s National Tax Department, based in San Francisco. He advises clients in...  |  Read More

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