Tax Law Archives | Page 22 of 56

30Mar 2022 by Anthony Diosdi

A Closer Look at the 2021 Schedule I-1for IRS Form 5471

Tax Law

By Anthony Diosdi Schedule I-1 for Form 5471 is used to report information determined at the CFC level with respect to amounts used in “global intangible low-taxed income” or GILTI inclusions by U.S. shareholders. The information from Schedule I-1 is used by U.S. shareholder(s) of a CFC to file IRS Form 8892, U.S. Shareholder Calculation of GILTI, and may assist in the completion of Form 1118 and 1116. Who Must Complete the Form 5471 Schedule RAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule R is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule R depends on what category of filer he or she can be classified as. For purposes of Form 5471, CFC shareholders…

30Mar 2022 by Anthony Diosdi

A Review of the 2021 Form 8992-U.S. Shareholder Calculation of Global Intangible Low-Taxed Income (“GILTI”)

Tax Law

By Anthony Diosdi The IRS Form 8892 is used to calculate a controlled foreign corporation (“CFC”) global intangible low-taxed income” or GILTI. Form 8892 consists of Parts I and II. A U.S. shareholder that owns, within the meaning of Section 958(a), stock in one or more CFCs must attach a Form 8892 to a Form 5471. This article will go line by line through the Form 8992 to determine how a GILTI inclusion is determined. This article is based on the Internal Revenue Service (“IRS”) instructions to Form 8992. CFC shareholders are also required to attach either separate Schedule A or separate Schedule B, depending upon whether the shareholder of the CFC is a member of a U.S. consolidated group. Part 1. Net Controlled Foreign Corporation (CFC) Tested IncomeIf the…

25Mar 2022 by Anthony Diosdi

A Closer Look at the Schedule R Used to Disclose Distributions from Foreign Corporations to CFC Shareholders on IRS Form 5471

Tax Law

By Anthony Diosdi Schedule R will be used to report basic information pertaining to distributions from foreign corporations. According to the instructions for Schedule R, the information reported on the schedule is required by Sections 245A, 959, and 986(c) of the Internal Revenue Code. Who Must Complete the Form 5471 Schedule RAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule R is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule R depends on what category of filer he or she can be classified as. For purposes of Form 5471, CFC shareholders are broken down by the following categories:Key TermsU.S. person: A U.S. person is generally a citizen or resident of the United States, a domestic…

25Mar 2022 by Anthony Diosdi

Demystifying Schedule O Used to Report Foreign Corporate Reorganizations and Acquisitions on IRS Form 5471

Tax Law

By Anthony Diosdi Schedule O of Form 5471 is used to report the organization or reorganization of a foreign corporation and the acquisition or disposition of its stock. This article will take a deep dive into each column and line of 2021 Schedule J of the Form 5471. Who Must Complete the Form 5471 Schedule OAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule O is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule O depends on what category of filer he or she can be classified as. For purposes of Form 5471, CFC shareholders are broken down by the following categories:Key TermsU.S. person: A U.S. person is generally a citizen or resident of the…

23Mar 2022 by Anthony Diosdi

Demystifying the 2021 Schedule M “Transactions Between Foreign Corporations” of IRS Form 5471

Tax Law

By Anthony Diosdi Schedule M is designed to measure Controlled Foreign Corporation (“CFC”) intercompany payments. Schedule M requires the majority U.S. owner to provide information on transactions between the CFC and its shareholders or other related persons. This article is designed to provide a basic overview of the Internal Revenue Service (“IRS”) Form 5471, Schedule M. Who Must Complete Schedule MAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule M is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule M depends on what category of filer he or she can be classified as. For purposes of Form 5471, CFC shareholders are broken down by the following categories:Key TermsU.S. person: A U.S. person is generally a…

23Mar 2022 by Anthony Diosdi

Demystifying the 2021 Tax Year IRS Form 5471 Schedule P Tracking “Previously Taxed Earnings and Profits of U.S. Shareholder of Certain Foreign Corporations”

Tax Law

By Anthony Diosdi Schedule P of Form 5471 is used to report PTEP of the U.S. shareholder of a controlled foreign currency (“CFC”) in the CFC’s functional currency. The term PTEP refers to earnings and profits (“E&P”) of a foreign corporation. In most cases, special ordering rules under Section 959 of the Internal Revenue Code apply in determining how E&P is reported on Schedule P. This article will take a deep dive into each column and line of 2021 Schedule P of the Form 5471. Who Must Complete the Form 5471 Schedule PAnyone preparing a Form 5471 knows that the return consists of many schedules. Schedule P is just one schedule of the Form 5471. Whether or not a CFC shareholder is required to complete Schedule P depends on what…

18Mar 2022 by Anthony Diosdi

A Closer Look as to How a Foreign Investor May Utilize a Section 897(i) Election to Avoid FIRPTA Withholding

Tax Law

By Anthony Diosdi Foreign investors actively invest in U.S. real estate by speculating on land and developing homes, condominiums, shopping centers, and commercial buildings. Many foreign investors own recreational property in popular U.S. beach and ski destinations. Any foreign investor in U.S. real estate should consider the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). FIRPTA is designed to ensure that a foreign investor is taxed on the disposition of a U.S. real property interest, which includes an interest in U.S. reality and an interest in a U.S. corporation that was a U.S. real property holding corporation (“RPHC”) at any time during the five-year period before the disposition. A corporation is deemed an RPHC if the value of its U.S. real property interests equals or exceeds the value…

18Mar 2022 by Anthony Diosdi

The Pros and Cons of Using a “Multi-Tiered Blocker Structure” to Avoid FIRPTA

Tax Law

By Anthony Diosdi Foreign investors actively invest in U.S. real estate by speculating on land and developing homes, condominiums, shopping centers, and commercial buildings. Many foreign investors own recreational property in popular U.S. beach and ski destinations. Any foreign investor in U.S. real estate should consider the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”). FIRPTA is designed to ensure that a foreign investor is taxed on the disposition of a U.S. real property interest, which includes an interest in U.S. reality and an interest in a U.S. corporation that was a U.S. real property holding corporation (“RPHC”) at any time during the five-year period before the disposition. A corporation is deemed an RPHC if the value of its U.S. real property interests equals or exceeds the value…

17Mar 2022 by Anthony Diosdi

A Closer Look at Cross-Border Estate Planning for Foreign Investors Utilizing Estate Tax Treaties and Corporate Structures

Tax Law

By Anthony Diosdi Foreign investors generally have the same goals of minimizing their income tax liabilities from their U.S. real estate and business investments, as do their U.S. counterparts, although their objective is complicated by the very fact that they are not U.S. persons. That is, non-U.S. investors must be concerned not only with income taxes in the United States, but also income taxes in their home country. Further, the United States has a special estate tax regime that is applicable to non-resident aliens that must be considered by foreign investors. Specifically, U.S. federal law imposes a transfer tax upon the privilege of transferring property by gift, bequest, or inheritance. This transfer tax takes the form of an estate tax. The tax is measured against a tax base that includes…

17Mar 2022 by Anthony Diosdi

Demystifying the QDOT in the Context of Cross-Border Estate Planning

Tax Law

By Anthony Diosdi U.S. federal law imposes a transfer tax upon the privilege of transferring property by gift, bequest, or inheritance. This transfer tax takes the form of an estate or gift tax. The tax is measured against a tax base that includes not only the assets of decedent’s probate estate, but also certain gifts by the decedent during life that are deemed to be the equivalent of testamentary transfers either because the decedent retained an interest or power over the gift. Items included in a decedent’s gross estate are reduced by other items to calculate the decedent’s taxable estate. The estate tax is currently ranging from 18% to 40%. United States citizens and residents receive a credit against the estate tax in the amount of $12,060,000 for the 2022…