International taxation in a nutshell / by Richard L. Doernberg.
2012
KF6419 .D64 2012 (Map It)
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Details
Author
Title
International taxation in a nutshell / by Richard L. Doernberg.
Published
St. Paul, Minn. : West, [2012]
Copyright
©2012
Call Number
KF6419 .D64 2012
Edition
Ninth edition.
Spine Title
International taxation
ISBN
0314275312
9780314275318
9780314275318
Description
lxi, 588 pages ; 19 cm.
System Control No.
(OCoLC)772593089
Note
Includes index.
Series
Record Appears in
Table of Contents
Preface
v
Table Of Cases
xxi
Table Of Internal Revenue Code Sections
xxv
Table Of Treasury Regulations And Revenue Rulings
liii
pt. 1
OVERVIEW OF FUNDAMENTAL CONCEPTS
ch. 1
Introduction
1
1.01.
Growth of International Trade
1
1.02.
Economics of International Trade
1
1.03.
The Central Problem of International Taxation
2
1.04.
Economics of Juridical Double Taxation
3
1.05.
Overview of Worldwide International Tax Systems
6
ch. 2
Basic U.S. Jurisdictional Tax Principles
12
2.01.
Introduction to U.S. Taxing Provisions
12
2.02.
Outbound Transactions
12
2.03.
Inbound Transactions
15
(a).
Individuals
16
(b).
Corporations
18
(c).
Partnerships
20
2.04.
Citizenship and Residency
20
(a).
Individuals
20
(b).
Corporations
24
2.05.
Expatriates
26
2.06.
Introduction to U.S. Income Tax Treaties
28
ch. 3
Source Rules
30
3.01.
The Income Source Rules
30
(a).
Interest
31
(1).
Domestic Payor
31
(2).
Foreign Payor
32
(b).
Dividends
33
(1).
Domestic Payor
33
(2).
Foreign Payor
33
(c).
Personal Services
34
(d).
Rentals and Royalties
38
(e).
Real Property
42
(f).
Personal Property
42
(1).
Purchased Inventory
42
(2).
Produced Personal Property
43
(3).
Intangible Property
47
(4).
Depreciable Personal Property
48
(5).
Other Personal Property
49
(6).
Sales Through Offices or Fixed Places of Businesses in the United States
50
(g).
Other Gross Income
51
(h).
Residence for Source Rule Purposes
53
3.02.
Deduction Allocation Rules
54
(a).
In General
54
(b).
Interest
59
(1).
U.S. Corporations
59
(2).
Foreign Corporations
65
(3).
Deductibility of Interest Expense
67
(c).
Research and Experimental Expenditures
68
(d).
Losses
71
pt. 2
U.S. ACTIVITIES OF FOREIGN TAXPAYERS
ch. 4
Taxing Rules
74
4.01.
Overview
74
4.02.
"Engaged in a Trade or Business" in the United States
75
4.03.
"Effectively Connected" Income
80
(a).
U.S. Source Income
80
(b).
Foreign Source Income
81
(c).
Income Effectively Connected to a Pre-existing Trade or Business
84
(d).
Effectively Connected Income Election
86
4.04.
Nonbusiness Income From U.S. Sources
86
(a).
Interest
88
(1).
Original Issue Discount
88
(2).
Portfolio Interest
89
(3).
Conduit Financing
92
(4).
Bank Deposits
94
(5).
Interest Substitutes
94
(6).
Interest Stripping (I.R.C. [§] 163(j))
95
4.04.
Nonbusiness Income From U.S. Sources---Continued
(b).
Dividends
98
(c).
Rents and Royalties
100
(d).
Income From Services
100
(e).
Social Security Benefits
101
(f).
Other FDAP Income
102
(g).
Capital Gains
102
4.05.
The Branch Profits Tax
103
(a).
The Branch Profits Tax on Branch Earnings
103
(b).
The Branch Profits Tax on Interest
106
(c).
The Branch Profits Tax and Secondary Withholding on Dividends
108
(d).
The Branch Profits Tax and Income Tax Treaties
109
4.06.
Foreign Investment in U.S. Real Property
109
(a).
Operational Income
109
(b).
Dispositional Income
111
4.07.
Transportation Income
116
4.08.
Taxation of Foreign Governments
118
ch. 5
The Role of Income Tax Treaties
121
5.01.
The Bilateral Income Tax Treaty Network
121
5.02.
The Treaty Making Process in the United States
123
5.03.
The Relationship of Income Tax Treaties and the Code
124
5.04.
Development of Model Income Tax Treaties
125
5.05.
Income Tax Treaty Provisions
128
(a).
Interpretation of U.S. Income Tax Treaties
128
(b).
Scope of the Treaty
129
(c).
Definitions
131
(d).
Classification and Assignment Rules
135
(1).
Business Income
135
(2).
Personal Services Income
143
(3).
Investment Income
145
(4).
Other Income
149
(e).
Avoidance of Double Taxation
149
(f).
Limitation on Benefits
150
(g).
Nondiscrimination
155
(h).
Mutual Agreement Procedure
157
(i).
Exchange of Information and Administrative Assistance
159
5.06.
Tax Sparing
161
ch. 6
Filing, Withholding, and Reporting Requirements
163
6.01.
Filing Requirements
163
6.02.
Sailing Permits
167
6.03.
The Need for Withholding
168
6.04.
Withholding on Dividends, Interest, and Other Periodic Payments
168
(a).
Income Subject to Withholding
170
(b).
Reduced Rates of Withholding
175
(c).
Who Is a Withholding Agent?
175
(d).
Payments Involving Partnerships, Trusts and Estates
177
(e).
Payments to Foreign Intermediaries
181
6.05.
Firpta Withholding
188
6.06.
Information Reporting
191
6.07.
Fatca Reporting and Withholding
192
(a).
Background
192
(b).
FFIs
193
(c).
Participating FFIs
195
6.08.
Penalty Provisions
196
pt. 3
FOREIGN ACTIVITIES OF U.S. TAXPAYERS
ch. 7
Introduction to U.S. Business Activity in Foreign Countries
199
7.01.
Introduction
199
7.02.
Citizens and Residents of the United States Living Abroad
201
(a).
Introduction
201
(b).
Foreign Income Exclusion
202
(c).
Housing Cost Amount
204
7.03.
Export Incentives
206
(a).
Background
206
(b).
Replacement for the ETI Regime
207
ch. 8
The Foreign Tax Credit
209
8.01.
Overview
209
(a).
Relieving Double Taxation
209
(b).
The Statutory Framework
216
8.02.
Eligibility
219
8.03.
Creditable Taxes
220
(a).
Is the Foreign Levy a Tax?
220
(b).
Is the Tax a Separate Tax or Part of a Broader Tax?
225
(c).
Is the Tax an Income Tax?
226
8.03.
Creditable Taxes---Continued
(d).
Taxes in Lieu of an Income Tax
231
(e).
Who Can Claim the Foreign Tax Credit
233
(f).
When Can the Foreign Tax Credit Be Claimed"
236
(g).
What Is the Amount of the Creditable Foreign Income Tax
239
8.04.
Computing the Direct Credit
243
8.05.
Computing the Indirect Credit
243
(a).
Overview
243
(b).
Minimum Ownership Requirements
245
(c).
Amount of Tax Deemed Paid
247
8.06.
Limitations on the Foreign Tax Credit
252
(a).
Overview
252
(b).
Separate "Baskets"
257
(1).
Passive Income Basket
260
(2).
Look-Through Rules
262
(3).
General Basket
265
(c).
Treatment of Foreign Losses
266
(d).
Treatment of U.S. Losses
272
(e).
Tax Credit Source Rules
273
8.07.
Tax Redeterminations
274
8.08.
Effect of Treaties on the Foreign Tax Credit
275
8.09.
Changes to the Interest Expense Allocation Rules
276
ch. 9
Intercompany Pricing
278
9.01.
Overview
278
9.02.
Arm's Length Principle
282
9.03.
Controlled and Uncontrolled Transactions
283
9.04.
Overview of Transfer Pricing Methodologies
284
9.05.
Transaction-Based Methodologies
285
(a).
Comparable Uncontrolled Price Method
285
(b).
Comparable Uncontrolled Transaction Method
287
(c).
Resale Price Method
290
(d).
Cost Plus Method
293
9.06.
Profit-Based Methodologies
296
(a).
Profit Split Methods
297
(1).
Comparable Profit Split Method
297
(2).
Residual Profit Split Method
298
(b).
Comparable Profits Method
301
9.07.
Other Key Features Under I.R.C. [§] 482 and the Regulations
304
(a).
Best Method Rule
305
(b).
Arm's Length Range
306
(c).
Comparability Analysis
306
(1).
Functional Analysis
307
(2).
Contractual Terms
308
(3).
Risk
309
(4).
Economic Conditions
309
(5).
Property or Services
310
(d).
Selection of the Tested Party
310
(e).
Multiple Year Data
311
(f).
Periodic Adjustments
311
9.08.
Penalties
313
9.09.
Application of I.R.C. 482 Principles
315
(a).
Customs Considerations
315
(b).
Other I.R.C. [§] 482 Adjustments
316
9.09.
Application of I.R.C. 482 Principles---Continued
(c).
I.R.C. [§] 482 and Foreign Tax Credit
318
(d).
I.R.C. [§] 482 and U.S. Treaties
318
9.10.
Advance Pricing Agreements
321
9.11.
Cost-Sharing
323
(a).
Cost Sharing Agreements
323
(b).
The Investor Model and the Income Method
327
9.12.
Controlled Services Transactions
328
(a).
Services Cost Method
329
(b).
Shared Services Arrangements
333
(c).
Additional Transfer Pricing Methods for Controlled Services Transactions
335
9.13.
The OECD Transfer Pricing Guidelines
338
ch. 10
Controlled Foreign Corporations and Related Provisions
340
10.01.
Overview
340
10.02.
Definitions: Controlled Foreign Corporation and United States Shareholder
341
10.03.
Income Taxable to Shareholders
345
(a).
Subpart F Income
347
(1).
Foreign Personal Holding Company Income
348
(2).
Foreign Base Company Sales Income
356
(3).
Foreign Base Company Services Income
367
(4).
Other Foreign Base Company Income
370
10.03.
Income Taxable to Shareholders---Continued
(5).
Allocation and Apportionment of Deductions
371
(6).
Relief Provisions
371
(7).
Insurance Income
376
(b).
Increase in Earnings Invested in U.S. Property
376
10.04.
Adjustments to Stock Basis
383
10.05.
Foreign Tax Credit
384
10.06.
Sale of CFC Stock
387
10.07.
Passive Foreign Investment Companies (PFICs)
390
ch. 11
Foreign Currency
400
11.01.
Overview
400
11.02.
Functional Currency
405
11.03.
Foreign Currency Transactions
408
(a).
Acquisition and Disposition of Foreign Currency
410
(b).
Lending and Borrowing Foreign Currency
411
(c).
Acquisition and Disposition of Assets Denominated in Foreign Currency
414
(d).
Accounts Receivable and Payable
415
(e).
Forward, Futures and Option Contracts
416
(f).
Hedging
417
11.04.
Foreign Currency Translation
422
(a).
Foreign Branches
422
(b).
Foreign Corporations
432
11.05.
Treatment of Individuals
434
ch. 12
International Tax-Free Transactions
436
12.01.
Overview
436
12.02.
Outbound Transactions
441
(a).
General Rule
441
(b).
The Active Trade or Business Exception
444
(c).
Branch Loss Recapture Rule
448
(d).
Intangible Assets
451
(e).
The Stock or Securities Exception---Foreign Corporation
454
(f).
The Stock or Securities Exception---U.S. Corporation
458
(g).
Outbound Spin-Offs
463
(h).
Outbound Liquidations
464
(i).
Transfers to Estates, Trusts and Partnerships
466
12.03.
Non-Outbound Transactions
467
12.04.
Carryover of Tax Attributes in Foreign-to-Foreign Nonrecognition Events
475
ch. 13
Tax Arbitrage and Economic Substance
477
13.01.
Introduction
477
13.02.
The Check-The-Box Regulations
481
13.03.
A Tax Arbitrage Sampler
484
(a).
Entities
484
(1).
Check-the-Box Elections
484
(2).
Dual Resident Corporations
491
(3).
Tax-Exempt Entities
497
(b).
Character of Income
500
(c).
Source of Income
504
13.03.
A Tax Arbitrage Sampler---Continued
(d).
Tax Base
507
(1).
Timing Differences
507
(2).
Permanent Differences
512
13.04.
Economic Substance and Other Doctrines
515
13.05.
Tax Governance and Transparency
526
(a).
Reportable Transactions and Listed Transactions
526
(b).
Uncertain Tax Positions (UTPs)
529
ch. 14
International Boycott and Foreign Bribery Provisions
531
14.01.
Overview of International Boycott Provisions
531
14.02.
Boycott Participation
533
14.03.
Examples of Penalized Conduct
535
(a).
Discriminatory Refusals to Do Business
535
(b).
Discriminatory Hiring Practices
537
(c).
Discriminatory Shipping and Insurance Arrangements
538
14.04.
Tax Effect of Boycott Participation
538
14.05.
Foreign Bribery Provisions
543
Index
547