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Section 861 Sourcing Rules: Income Classifications, Allocating and Apportioning Expenses, Calculating the FTC

A live 110-minute CPE webinar with interactive Q&A

This program is included with the Strafford CPE Pass. Click for more information.
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Friday, May 31, 2024 (in 7 days)

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

or call 1-800-926-7926

This webinar will discuss the sourcing rules under IRC Section 861 and provide examples of applying these to income classes, allocating and apportioning expenses, and determining the availability of the foreign tax credit. Our panel of foreign tax veterans will provide scenarios that walk international tax practitioners through these complex calculations.

Description

Section 861(a) governs sourcing of gross income within and outside the United States. Not only does sourcing affect the U.S. federal income consequences for foreigners, it is also used to calculate the availability of the foreign tax credit. The type of income, whether interest, dividends, rents, proceeds from the disposition of real property, etc., influences the tax consequences.

Section 861(b) defines how taxable income is determined by allocating and apportioning expenses, losses, and other deductions to various classes of gross income. The resulting income is used to calculate the foreign tax credit limitation and CFC Subpart F-tested income. The steps for allocating and apportioning interest, research and development expenses, income tax, and stewardship expenses are complicated but must be understood by international tax professionals.

Listen as our panel of international tax experts dives into the complexities of IRC Section 861 and its application to sourcing U.S. income.

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Outline

  1. U.S. sourced income under Section 861: introduction
  2. Foreign tax credits
  3. Sourcing rules
    1. Interest and dividends
    2. Personal services
    3. Rents and royalties
    4. Real property proceeds
    5. Overlap rules
  4. Allocation and apportionment of expenses
    1. Interest
    2. Research and development
    3. Income tax
    4. Stewardship
  5. Examples

Benefits

The panel will review these and other critical issues:

  • Sourcing interest and dividend income under Section 861(a)
  • The difference between allocating and apportioning expenses under IRC Section 861(b)
  • Specific examples of the application of the Section 861 guidelines to the calculation of the available foreign tax credit
  • Categorizing CFC income under Section 861

Faculty

Bordia, Surbhi
Surbhi Bordia

Partner
Armanino

Ms. Bordia has over 10 years of public accounting experience. She addresses complex tax issues that impact...  |  Read More

Gbegnon, Kodj
Kodj Gbegnon

Principal
PWC

Mr. Gbegnon is a partner in the International Tax Services practice at PwC’s Silicon Valley office (San...  |  Read More

Zemil, Nick
Nick Zemil

Director
PwC

Mr. Zemil focuses his practice on assisting taxpayers with large-scale international tax issues, with an emphasis on...  |  Read More

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