Introduction to United States international taxation / Paul R. McDaniel, James R. Repetti, Diane M. Ring.
2014
KF6441 .M3 2014 (Map It)
Available at Cellar
Formats
| Format | |
|---|---|
| BibTeX | |
| MARCXML | |
| TextMARC | |
| MARC | |
| DublinCore | |
| EndNote | |
| NLM | |
| RefWorks | |
| RIS |
Items
Details
Author
Title
Introduction to United States international taxation / Paul R. McDaniel, James R. Repetti, Diane M. Ring.
Published
Alphen aan den Rijn, The Netherlands : Kluwer Law International, [2014]
Copyright
©2014
Call Number
KF6441 .M3 2014
Edition
Sixth edition.
ISBN
9789041136565
9041136568
9041136568
Description
xviii, 228 pages ; 25 cm
System Control No.
(OCoLC)874969056
Bibliography, etc. Note
Includes bibliographical references and index.
Record Appears in
Gift
Purchased from the income of the Edith L. Fisch Fund
Added Author
Gift
The Arthur W. Diamond Law Library
Purchased from the income of the Edith L. Fisch Fund
Table of Contents
About the Authors
v
Preface
xvii
ch. 1
Introduction
1
ch. 2
The United States Income Tax System: General Description
3
2.1.
Introduction
3
2.1.1.
Scope
3
2.1.2.
Classification Issues
3
2.2.
The Corporation Income Tax
4
2.2.1.
Tax Rates
4
2.2.2.
The Tax Base
5
2.2.2.1.
Gross Income
5
2.2.2.2.
Deductible Expenditures
5
2.2.2.3.
Expenditures Not Deductible
7
2.2.2.4.
Special Limitations on Tax Shelter Losses
8
2.2.2.5.
Special Limitations on Deductibility of Corporate Interest Expense
8
2.2.2.6.
Net Operating Loss Carryforward and Carryback
9
2.2.3.
Capital Gains and Losses
9
2.2.4.
Credits against Tax
10
2.2.5.
Alternative Minimum Tax: Corporations
11
2.2.5.1.
Background
11
2.2.5.2.
The AMT Base
11
2.2.5.3.
AMT Rate
12
2.2.5.4.
Credit against AMT
12
2.2.5.5.
Final Tax Liability
13
2.2.5.6.
Minimum Tax Credit
13
2.2.6.
Transactions between Corporations and Shareholders
13
2.2.7.
Penalty Taxes
16
2.2.7.1.
Accumulated Earnings Tax
16
2.2.7.2.
Personal Holding Company Tax
16
2.3.
The Individual Income Tax
17
2.3.1.
Tax Rates
17
2.3.2.
The Tax Base
17
2.3.2.1.
Gross Income
18
2.3.2.2.
Dividends and Capital Gains and Losses
18
2.3.2.3.
Deductible Expenditures: Business and Investment
19
2.3.2.4.
Expenditures Not Deductible
20
2.3.2.5.
Special Limitations on Tax Shelter Losses and Interest Deductions
20
2.3.2.5.1.
Limitation of Deductions to Amount at Risk
20
2.3.2.5.2.
Limitations on the Deduction for Interest Expense
21
2.3.2.5.3.
Limitations on the Deduction of Passive Activity Losses
22
2.3.2.6.
Deductible Expenditures: Personal
23
2.3.3.
Credits against Tax
24
2.3.4.
Alternative Minimum Tax: Individuals
24
2.4.
Trusts and Estates
25
2.5.
Partnerships
25
2.6.
S Corporations
26
2.7.
Other Flow through Entities
27
2.7.1.
Regulated Investment Company (RIC)
27
2.7.2.
Real Estate Investment Trust (Reit)
27
2.7.3.
Real Estate Mortgage Investment Conduit (Remic)
28
2.8.
Accounting Aspects
28
2.9.
Statute of Limitations and Penalties
29
ch. 3
Jurisdictional Principles
31
ch. 4
Source Rules
33
4.1.
General
33
4.2.
Application of Source Rules to Specific Items of Gross Income
33
4.2.1.
Interest
34
4.2.2.
Dividends
35
4.2.3.
Personal Services Income
35
4.2.4.
Rents and Royalties
36
4.2.5.
Gains from Disposition of Real Property
36
4.2.6.
Gains from Sale of Personal Property
36
4.2.7.
Insurance Underwriting Income
37
4.3.
Application of Source Rules to Other Items of Income
38
4.3.1.
General
38
4.3.2.
Income Partly from United States Sources and Partly from Foreign Sources
38
4.4.
Allocation of Deductions to Arrive at Taxable Income
39
4.4.1.
Background
39
4.4.2.
General Rules
40
4.4.3.
Special Rules
42
4.4.3.1.
Interest
42
4.4.3.1.1.
General
42
4.4.3.1.2.
Elective Worldwide Allocation
43
4.4.3.1.3.
Foreign Taxpayers
44
4.4.3.1.4.
Partnerships
45
4.4.3.2.
Research and Development Expenses
45
4.4.3.3.
Other Expenses
47
ch. 5
Income Taxation of Nonresident Aliens and Foreign Corporations
49
5.1.
Introduction
49
5.2.
The "Trade or Business" Concept
50
5.2.1.
Background
50
5.2.2.
The Existence of a Trade or Business
51
5.2.3.
The Location of a Trade or Business in the United States
53
5.3.
The "Effectively Connected" Concept
53
5.3.1.
General
53
5.3.2.
Capital Gains and Fixed or Determinable Income
55
5.3.2.1.
The "Asset Use" Test
55
5.3.2.2.
The "Business-Activities" Test
56
5.3.3.
Gains from the Disposition of United States Real Property Interests
57
5.3.4.
Other Income
59
5.3.5.
Foreign Source Income Effectively Connected with a United States Business
59
5.4.
Taxation of Nonresident Aliens
61
5.4.1.
General
61
5.4.2.
Determination of Status as Resident or Nonresident
61
5.4.2.1.
The Permanent Residence Test
62
5.4.2.2.
The Substantial Presence Test
62
5.4.2.3.
The First Year Election
63
5.4.3.
Income Taxed at 30% Rate
64
5.4.4.
Income Taxed at Full United States Progressive Tax Rates
65
5.4.5.
Exempt Income
65
5.4.5.1.
Bank Deposits
65
5.4.5.2.
Dividends from Foreign Business Income
66
5.4.5.3.
Portfolio Interest
66
5.4.5.4.
Capital Gains
67
5.4.6.
Treaties
67
5.4.7.
Taxation of Nonresident Aliens Who Are Former United States Citizens or Legal Permanent Residents
67
5.4.7.1.
Covered Expatriates: Former United States Citizens
68
5.4.7.2.
Covered Expatriates: Former United States Residents
68
5.4.7.3.
Deferral of Payment
68
5.5.
Taxation of Foreign Corporations
69
5.5.1.
General
69
5.5.2.
Income of Foreign Corporations Taxed at 30% Rate
69
5.5.3.
Income of Foreign Corporations Taxed at Normal Corporation Tax Rates
69
5.5.4.
Exempt Income
69
5.5.5.
Branch Profits Tax
70
5.5.5.1.
Background
70
5.5.5.2.
Structure of the Branch Profits Tax
70
5.5.5.3.
Treaty Aspects
71
5.5.6.
Branch Interest Tax
72
5.5.6.1.
General
72
5.5.6.2.
Treaty Aspects
73
5.5.7.
Alternative Minimum Tax
74
5.5.8.
Penalty Taxes Applicable to Foreign Corporations and Domestic Corporations with Foreign Shareholders
74
5.5.8.1.
Accumulated Earnings Tax
74
5.5.8.1.1.
Foreign Corporations with United States Income
74
5.5.8.1.2.
Foreign Shareholders in Domestic Corporations
74
5.5.8.2.
Personal Holding Company Tax
75
5.5.9.
Comparison of Branch and Subsidiary Operations
75
5.6.
Taxation of Foreign Partnerships and Foreign Partners
76
5.6.1.
Foreign Partnerships
76
5.6.2.
Foreign Partners in a United States or Foreign Partnership
76
5.7.
Taxation of Foreign Trusts and Foreign Beneficiaries
76
5.7.1.
Foreign Trusts
76
5.7.1.1.
Classification Issues
76
5.7.1.2.
Taxation of Foreign Trusts
77
5.7.2.
Taxation of Foreign Beneficiaries
78
5.7.3.
Foreign Grantor Trusts
79
5.8.
Procedural Aspects
79
5.8.1.
Return and Disclosure Requirements
79
5.8.2.
Withholding at Source
80
5.8.2.1.
Fixed or Determinable Income
80
5.8.2.2.
Disposition of United States Real Property Interests
81
5.8.2.3.
Withholding on Foreign Partners
82
ch. 6
Taxation of Foreign Source Income of United States Persons: The Foreign Tax Credit
83
6.1.
General
83
6.2.
Treatment of Foreign Taxes in General
83
6.3.
Objectives of the Foreign Tax Credit
84
6.4.
The Direct Foreign Tax Credit
86
6.4.1.
Eligibility for Tax Credit
86
6.4.1.1.
Persons Eligible
86
6.4.1.2.
Taxes Eligible
87
6.4.2.
In Lieu of Taxes
89
6.4.3.
Time and Manner of Claiming Credit
89
6.4.4.
Nonresident Aliens and Foreign Corporations
90
6.5.
The Indirect Foreign Tax Credit
90
6.6.
Overall Limitation on the Foreign Tax Credit
93
6.6.1.
Historical Background
93
6.6.2.
Foreign Tax Credit Basket System after 2006
96
6.6.2.1.
A Closer Look at the Pre-2007 Baskets
97
6.6.2.2.
Income that Would Previously Have Been Placed in a Basket that Is Eliminated after 2006
100
6.6.3.
The Look-Through Rules
100
6.6.3.1.
Dividends, Interest, Rents, and Royalties from Controlled Foreign Corporations
100
6.6.3.2.
Dividends from Noncontrolled Section 902 Corporations
101
6.6.4.
The Treatment of Losses
102
6.6.4.1.
Foreign Losses
102
6.6.4.2.
United States Losses
103
6.7.
Carryback and Carryover of Excess Credits
104
6.8.
Special Limitations on the Foreign Tax Credit
104
6.9.
Relief for Small Investors
104
6.10.
Anti-abuse Rule: Withholding Tax Strategies
104
6.11.
Additional Anti-abuse Provisions
105
6.11.1.
Recent Reforms
105
6.11.2.
The Problem
106
6.11.3.
The Technical Taxpayer Regulations
107
6.11.4.
Foreign Tax Credit Splitter Rules
107
6.11.5.
Covered Asset Acquisition
108
6.12.
Foreign Tax Credits and Treaties
109
6.13.
Summary Perspectives on the Foreign Tax Credit Mechanism
110
ch. 7
Treatment of Foreign Business Operations and Investments by United States Persons
113
7.1.
Background
113
7.2.
Business Operations through Foreign Corporations Controlled by United States Persons: Subpart F
114
7.2.1.
Basic Structure of Subpart F
114
7.2.2.
Tax Treatment of United States Shareholder
115
7.2.3.
Definition of a CFC
115
7.2.4.
Income Taxable to United States Shareholders
116
7.2.4.1.
Subpart F Income
116
7.2.4.2.
Earnings Invested in United States Property
119
7.2.5.
Foreign Tax Credit
121
7.2.6.
Distributions and Adjustments to Basis
122
7.2.7.
Denial of Deferral Benefits for Boycott Income and Foreign Bribes and to Achieve Other United States Foreign Policy Objectives
123
7.2.8.
Related Issues
123
7.2.8.1.
The Temporary Tax Holiday for Repatriated Profits
123
7.2.8.2.
Corporate "Inversions"
124
7.2.9.
The Role of Subpart F
126
7.3.
Formation, Reorganization, and Liquidation of Foreign Corporations Section 367
128
7.3.1.
Background
128
7.3.1.1.
Section 351: Formation of Corporation and Transfers of Stock to Controlling Stockholders in Exchange for Property
129
7.3.1.2.
Reorganizations
129
7.3.1.3.
Liquidations
131
7.3.2.
Application of Section 367
131
7.3.2.1.
General
131
7.3.2.2.
"Outbound" Transfers
131
7.3.2.2.1.
Transfers of Assets Other than Intangibles or Stock
131
7.3.2.2.2.
Transfers of Intangibles
132
7.3.2.2.3.
Transfers of Stock
132
7.3.2.2.4.
Spin-Offs
134
7.3.2.2.5.
Liquidations
134
7.3.2.3.
Other Transactions: Section 367(b) and the Repatriation of Earnings and Profits
134
7.3.3.
Outbound Transfers to Other Entities
136
7.4.
Disposition of Stock in a Controlled Foreign Corporation: Section 1248
136
7.4.1.
Background
136
7.4.2.
Scope of Coverage
137
7.4.3.
Calculation of Tax
138
7.4.4.
Section 1248 and Section 367(b)
138
7.5.
Foreign Investment Activities by United States Persons Utilizing Foreign Corporations
139
7.5.1.
Background
139
7.5.2.
Passive Foreign Investment Companies
140
7.5.2.1.
Definition of Passive Foreign Investment Company (PFIC)
140
7.5.2.2.
Imposition of an "Interest Charge" on United States Shareholders
141
7.5.2.3.
Qualified Electing Funds
142
7.5.2.4.
Mark-to-Market Election
143
7.5.2.5.
Relation between PFIC and Subpart F
143
7.6.
Investment through Foreign Trusts
143
7.6.1.
Background
143
7.6.2.
Foreign Grantor Trusts
144
7.6.3.
Transfers to and Distributions from Non-grantor Trusts
145
7.6.4.
Procedural Aspects
145
ch. 8
Transfer Pricing
147
8.1.
Background
147
8.2.
Scope of Coverage
148
8.3.
General Approach
149
8.3.1.
Determining Comparability
150
8.3.2.
Arm's Length Ranges
151
8.3.3.
Determining "the Transaction"
151
8.4.
Specific Transactions
152
8.4.1.
Sales of Goods
152
8.4.1.1.
Comparable Uncontrolled Price Method
152
8.4.1.2.
Resale Price Method
153
8.4.1.3.
Cost Plus Method
153
8.4.1.4.
Comparable Profits Method
154
8.4.1.4.1.
Profit Level Indicators
154
8.4.1.4.2.
Calculating Operating Profit
155
8.4.1.5.
Profit Split
155
8.4.2.
Intangibles
156
8.4.2.1.
Comparable Uncontrolled Transaction
157
8.4.2.2.
Cost Sharing Agreements
158
8.4.3.
Services
160
8.4.4.
Loans
161
8.5.
Other Aspects of Section 482 Allocations
162
8.5.1.
Set Offs
162
8.5.2.
Correlative Adjustments
163
8.5.3.
Adjustments of Accounts after Section 482 Allocation
163
8.6.
International Aspects
164
8.6.1.
Treaties
164
8.6.2.
Foreign Tax Credit
164
8.6.3.
Blocked Income
165
8.7.
Advance Pricing Agreements
165
8.8.
Accuracy-Related Penalties
167
ch. 9
Special Treatment of Foreign Income
169
9.1.
General
169
9.2.
Incentives to Increase United States Exports
169
9.2.1.
Background
169
9.2.2.
Treatment of Income Earned Abroad
171
9.2.2.1.
General
171
9.2.2.2.
Eligibility for the Exclusion
172
9.2.2.3.
The Foreign Earned Income Component
173
9.2.2.4.
The Housing Cost Component
173
9.2.2.5.
Election of Section 911 Benefits
174
ch. 10
Foreign Currency Issues
175
10.1.
Background
175
10.2.
Basic Concepts
176
10.2.1.
Functional Currency and Qualified Business Unit
176
10.2.2.
Translation of Foreign Currency Income and Foreign Taxes into Dollars
177
10.2.2.1.
Translation of Branch Operations
177
10.2.2.2.
Translation of Corporate Earnings and Profits
179
10.2.2.3.
Translation of Foreign Tax Credits
180
10.3.
Transactions in a Nonfunctional Currency
180
10.3.1.
"Section 988 Transactions"
181
10.3.2.
Foreign Exchange Futures Contracts, Hedges, and Other Financial Transactions
182
10.3.3.
Other Transactions
183
ch. 11
Income Tax Treaties
185
11.1.
Background
185
11.2.
Treaty Objectives and Techniques
186
11.3.
Status of Treaties
187
11.4.
Qualification for Treaty Benefits
188
11.4.1.
Persons Covered
188
11.4.1.1.
"Tie Breaker" Clause
189
11.4.1.2.
"Hybrid" Entities
189
11.4.1.3.
"Saving Clause"
191
11.4.2.
Disclosure Requirements
191
11.4.3.
Limitation on Treaty Benefits
192
11.4.3.1.
Background
192
11.4.3.2.
Structure of Limitation on Benefits Article
193
11.4.4.
Overall Evaluation of Limitation on Benefits Provisions
194
11.4.5.
Taxes Covered
194
11.5.
Treatment of Business Income
195
11.5.1.
In General
195
11.5.2.
Permanent Establishment
196
11.5.3.
Business Profits
196
11.5.4.
"Attributable To"
197
11.6.
Treatment of Investment Income
198
11.6.1.
In General
198
11.6.2.
Classification Issues
199
11.7.
Real Property
200
11.8.
Gains from the Disposition of Property
200
11.9.
Treatment of Personal Services Income
200
11.9.1.
Employees
200
11.9.2.
Independent Personal Services
201
11.10.
Foreign Tax Credit Aspects
201
11.11.
Nondiscrimination
203
11.12.
Administrative Provisions
205
11.12.1.
Competent Authority Provisions
205
11.12.2.
Mandatory Arbitration
205
11.12.3.
Exchange of Information
206
ch. 12
Wealth Transfer Taxation
207
12.1.
The United States Wealth Transfer Tax System: Genera Description
207
12.1.1.
Background
207
12.1.2.
The Estate Tax
208
12.1.3.
The Gift Tax
210
12.1.4.
The Generation-Skipping Tax
210
12.2.
Jurisdictional Principles
212
12.3.
Estate Tax: International Aspects
212
12.3.1.
Situs Rules
212
12.3.1.1.
Property Situated within the United States
213
12.3.1.2.
Property Situated Outside the United States
213
12.3.2.
United States Taxation of Citizens and Resident Aliens: The Foreign Tax Credit
214
12.3.3.
United States Taxation of Nonresident Aliens
215
12.4.
Gift Tax: International Aspects
216
12.4.1.
Gift Taxation of United States Citizens and Resident Aliens
216
12.4.2.
Gift Taxation of Nonresident Aliens
216
12.5.
The Generation-Skipping Tax: International Aspects
217
12.6.
Expatriation to Avoid Transfer Taxes
217
12.6.1.
Estate Tax for Taxpayers Who Expatriated before June 17, 2008
217
12.6.2.
Gift Tax for Taxpayers Who Expatriated before June 17, 2008
218
12.6.3.
Estate and Gift Tax for Taxpayers Who Expatriated on or after June 17, 2008
219
12.7.
Wealth Transfer Tax Treaties
219
12.7.1.
Background
219
12.7.2.
Domicile
220
12.7.3.
Rules for Taxation
220
12.7.3.1.
Real Property
220
12.7.3.2.
Business Property
221
12.7.3.3.
Other Property
221
12.7.4.
Deductions and Exemptions
221
12.7.5.
Relief from Double Taxation
222
Index
223