Tax Considerations of Repatriation: Previously Taxed E&P, Non-PTEP, Return of Capital, Multi-Tiered Distributions

Note: CLE credit is not offered on this program

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


Conducted on Tuesday, June 8, 2021

Recorded event now available

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Program Materials

This webinar will cover repatriation issues for multinational taxpayers. Our panel of foreign tax experts will examine distributions of E&P from PTEP, non-PTEP, and the return of basis and explain the tax considerations and benefits available for each distribution type.

Description

Before the 2017 Tax Act multinationals businesses avoided paying U.S. taxes by not repatriating foreign earnings to its U.S. shareholders. Profits stayed in the country of origin or were repatriated to the U.S. and taxed. Under Section 965 of the same tax act, a transition tax was levied on all previously unrepatriated earnings. Now even though the tax rates are lower, the decision to repatriate earnings is much more complex.

Distributions are made from previously taxed earnings and profits (PTEP) first. Although these earnings were previously taxed, foreign tax credits and foreign currency gains and losses must be considered. Following PTEP, distributions are made from non-PTEP. For non-PTEP distributions, a DRD (dividends received deduction) under Section 245A may be available.

Once E&P is exhausted, shareholders have a return of basis and calculations of potential gains to consider. Further complicating the calculations are tiered multi-national corporations. Here calculations can be required at each level and recharacterization of gains under Section 1248(c)(2) may need to be considered. Advisers to multi-national businesses and shareholders need be aware of the tax implications of returning money to its U.S. investors.

Listen as our authoritative panel explains the issues that must be addressed when repatriating earnings to U.S. shareholders.

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Outline

  1. CFCs
  2. Taxation regimes
  3. GILTI
  4. FDII
  5. Subpart F
  6. Section 965 transition tax
  7. E&P
    1. PTEP and ordering rules
    2. Non-PTEP and 245A DRD
    3. Return of basis
  8. Foreign currency gains and losses
  9. Foreign withholding and tax credits

Benefits

The panel will cover these and other critical issues:

  • Identifying distributions for ordering rules
  • Analyzing distributions of PTEP and non-PTEP for tax consequences
  • Calculating gain or loss on returns of capital
  • Determining foreign currency gains and losses
  • When non-PTEP distributions may be eligible for a 245A dividends received deduction

Faculty

Gasbarra, Mark
Mark C. Gasbarra, CPA

National Managing Director
Forte International Tax

Mr. Gasbarra has more than thirty-five years of international tax experience serving a wide array of companies across...  |  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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