Taxation of Foreign Source Income Under New Tax Law

Expansion of Subpart F, Dividends Received Deductions, Sales or Transfers of Foreign Corporations, Exceptions

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


Tuesday, November 19, 2019

1:00pm-2:50pm EST, 10:00am-11:50am PST

Early Registration Discount Deadline, Friday, October 25, 2019

or call 1-800-926-7926

This webinar will provide tax professionals guidance on new rules and final and proposed regulations governing the taxation of foreign source income. The panel will present an in-depth analysis of the expansion of Subpart F, the global intangible low taxes income (GILTI), the dividends received deduction (DRD), and the 962 election, as well as provide guidance on avoiding pitfalls in planning and compliance.

Description

The 2017 tax law places the taxation of foreign-source income at the forefront of developing tax planning strategies for U.S. individual and corporate shareholders. Notable changes to Subpart F, the 2017 transition tax, the addition of GILTI, the DRD, and its application to transfers of stock in foreign corporations, among others, require a careful analysis of the new rules affecting the structure of offshore activities and the U.S. reporting of foreign-source income.

Subpart F requires deeming certain income of a controlled foreign corporation (CFC) as distributed to the U.S. shareholders and subject to taxation. The addition of GILTI, which is viewed as an expansion of U.S. tax jurisdiction beyond the boundaries of Subpart F, now increases the amount of CFC income currently taxable to U.S. shareholders. in circumstances where deferral was allowed under prior law. Also, changes to the rules regarding US ownership which counts towards CFC status results in the treatment of more foreign corporations as CFCs.

Income that is taxed under local law at a rate higher than 18.9% will be excluded from GILTI under newly proposed regulations. US corporate shareholders of CFCs are eligible to claim a deduction that reduces the effective tax on GILTI income to 10.5%. While individuals cannot claim the deduction, an election under Section 962 may reduce the current tax payment on profits retained offshore.

The DRD under Code Section 245A allows a domestic corporation to claim a 100% deduction for the foreign-source portion of dividends received from specified 10%-owned foreign corporations. This benefit does not extend to hybrid dividends.

Tax professionals and advisers must be mindful of the potential tax complexities associated with the rules as applied to foreign-source income.

Listen as our panel guides tax advisers on the differences between the new tax rules and prior law impacting U.S. shareholders of stocks in foreign corporations.

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Outline

  1. Taxation of foreign source income: prior law vs. new tax law
  2. Code 245A and deducting foreign-source dividends received (including hybrid transactions)
  3. Treatment of sales or transfers of stock in foreign corporations
  4. Section 1248 rules
  5. Expansion of Subpart F: new CFC ownership rules
  6. Global intangible low-tax income (GILTI)
  7. Section 962 election and subsequent distributions

Benefits

The panel will review these and other relevant issues:

  • How the ownership rules of Subpart F have changed
  • The increase in the amount of CFC income taxable to U.S. shareholders
  • Understanding U.S. reporting requirements
  • Tax implications of sales or transfers of foreign interests by U.S. individual and corporate shareholders
  • Best practices and planning techniques for counsel and tax professionals regarding the taxation of foreign income

Faculty

Antebi, Galia
Galia Antebi

Member (Partner)
Ruchelman

Ms. Antebi focuses her practice on the international and domestic tax aspects of business structuring for worldwide...  |  Read More

Ruchelman, Stanley
Stanley C. Ruchelman

Chairman
Ruchelman

Mr. Ruchelman concentrates his practice in the area of tax planning for transactional business operations, with...  |  Read More

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