Category Archives: International – Outbound

Partnership Abuse of Entity Rule Invoked in Section 367(d) Outbound IP Transaction

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Our International Tax Group explores a recent, heavily redacted Chief Counsel Advice applying the partnership abuse of entity rule to a Section 367(d) outbound IP transaction. Outbound IP transfers and Section 367(d) The partnership abuse of entity rule Interaction between the partnership abuse of entity rule and Section 367(d) successor rules Read the full advisory here. [...]Read more

International Tax Reform Is Here

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Our International Tax Group reveals how savvy and flexible taxpayers can optimize their tax position in the new landscape created by the Tax Cuts and Jobs Act. New territorial system and mandatory repatriation Anti-base erosion measures Changes to Subpart F and other provisions Click here to read the full advisory. [...]Read more

Proposed Sec. 367 Regs Say Goodbye to Goodwill Exception

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Citing aggressive taxpayer positions, recently proposed regulations do away with the foreign goodwill exception to gain or income recognition for outbound transfers under Section 367. The rules also restrict the type of property eligible for the active business exception. Reasons for Change Per the preamble, taxpayers interpret Section 367 and the regulations in one of two ways when claiming favorable treatment of foreign goodwill and going concern value. One interpretation argues that goodwill and going concern value are not IP within the meaning of Section 936(h)(3)(B) and thus not subject [...]Read more

Déjà Vu All Over Again – The Recurring Saga of Expiring Tax Provisions

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If you go by what Yogi Berra says, tax policy and baseball have a lot in common.  Just as we head toward the end of the regular season of baseball and hope we make it to play-offs, Congress is doing the same.  Having returned from the August recess, they are looking ahead at what they need to do to finish strong.  As for déjà vu, the atmosphere surrounding expired tax provisions is markedly similar to what it was last year around this time.  Will the result be different this year?  Maybe.  Let’s take a look at the issues and what’s happened so far. Discussions of tax reform have [...]Read more

FBAR Deadline Will Move to April 15, 2017 for 2016 Year

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Beginning with foreign bank account reports (FinCEN Form 114, known as the FBAR) for the 2016 calendar year, FBARs will be due on April 15 of the following year. A six-month extension to October 15 will be available upon request. FBARs of U.S. citizens and residents living abroad will be due on June 15 – with an additional four-month extension available to October 15. No additional two-month extension to December 15 will be allowed, however, as is permitted for the tax returns of U.S. persons living abroad. These changes were part of the Surface Transportation and Veterans Health Care Choice [...]Read more

Few Changes in Final Rules on Foreign Tax Credit Splitters

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On February 9, 2015, the U.S. Treasury released final regulations on foreign tax credit (FTC) splitting arrangements (the “2015 Regulations”). The final rules, released the same day that the 2012 temporary and proposed regulations were set to expire, offer some definitional and other clarifications and add useful illustrations. But for the most part, the 2015 Regulations adopt the prior proposed and temporary regulations, including the exclusive list of FTC splitter arrangements. Notably, the final rules fail to address several “mechanical issues” (i.e., issues concerning the tracking [...]Read more

Taxpayers Can Be Somewhat “GRAteful” for New Rules on Gain Recognition Agreements

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This November the IRS has given some taxpayers subject to reporting on outbound property transfers to foreign corporations something to be thankful for. Under Section 367(a) of the Code, if a US person transfers property to a foreign corporation in a Section 332, 351, 354, 356, or 361 transfer or exchange, the foreign corporation generally is not treated as a corporation for purposes of determining the US transferor’s gain on the transfer. This rule typically means that the US person will recognize gain on what would otherwise be a non-taxable transfer. The regulations offer exceptions [...]Read more

International Tax Advisory: Distribution of Foreign Company Stock in Outbound Reorganization Was Indirect Disposition of Intangible Property Subject to Section 367(d) Disposition Rule

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This advisory discusses how in Chief Counsel Advice (CCA) 201321018, the IRS concluded that a U.S. target corporation’s Section 361(c) distribution of stock of a foreign corporation pursuant to a reorganization constituted an indirect disposition of intangible property, requiring the target to recognize income under the “Disposition Rule” of Section 367(d). The advisory is provided in PDF on the Alston & Bird website:   Written by Edward Tanenbaum, Partner, Federal & International Tax | Alston & Bird LLP [...]Read more

The Supreme Court, Federal Taxation and the Constitution

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In my recently published book, The Supreme Court, Federal Taxation and the Constitution, I review several constitutional issues that could impact the coming consideration of broad scale tax reform in Congress. It is likely that Congress will be more attentive to possible constitutional issues than it was when it enacted the health care tax provisions in 2010. The failure to clearly label that tax as a tax fueled multiple lawsuits against the tax that ultimately had to be decided by the Supreme Court in a surprising split decision in which Chief Justice Roberts wound up siding with the supporters [...]Read more

International Tax Advisory: IRS Issues Regulations on Outbound Asset Transfers

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This month’s advisory discusses recent IRS regulations on outbound asset transfers; a recent case where the Tax Court held that a nonresident professional athlete’s income from an endorsement deal should be allocated between personal services income and royalties for use of the taxpayer’s “image rights,” based on the facts and circumstances; and a number of President Obama’s 2014 budget proposals that would reform U.S. international tax provisions. The advisory is provided in PDF on the Alston & Bird website:  [...]Read more