Tax Law Archives | Page 24 of 56

28Feb 2022 by Lynn Ching

What Constitutes a Foreign Branch?

Tax Law

By Lynn K. Ching In general, a foreign branch for U.S. tax purposes is a division which operates a trade or business in a foreign country and maintains a separate set of books and records. The foreign branch generally is subject to the income tax laws in the foreign country in which it operates. Under the treasury regulations, the term foreign branch means an integral business operation carried on by a U.S. person outside the United States. Whether the activities of a U.S. person outside the United States constitute a foreign branch operation must be determined under all the facts and circumstances. Activities outside the United States shall be deemed to constitute a foreign branch for purposes of this section if the activities constitute a permanent establishment under the terms…

23Feb 2022 by Anthony Diosdi

A Guide to the Taxation of Crypto Staking and How Investors Can Calculate Their Basis In Staking Rewards

Tax Law

By Anthony Diosdi and Kerrin Liu Just over a year ago, a couple from Tennessee fully paid taxes associated with Tezos network staking rewards earned. The couple then filed suit in federal district court in the middle district of Tennessee seeking a refund of the taxes paid associated with Tezos network. See Joshua Jarrett et ux. V. United States, No. 3:21-cv-00419 (M.D. Tenn. 2021)(May 26, 2021). Rather than allowing the case to move forward in the court, recently, the Internal Revenue Service (“IRS”) conceded the case. The concession prevents the court from issuing much needed guidance in this area. This article discusses the current state of the taxation of staking and how investors can calculate their basis in staking rewards. An Overview of Crypto StakingCryptocurrency staking takes place when an…

17Feb 2022 by Anthony Diosdi

The U.S. Tax Consequences of Terminating U.S. Residency With PFIC Shares and Potential Planning Options

Tax Law

By Anthony Diosdi In the last 20 years, there has been a significant upward trend of highly skilled foreign workers moving to the United States for temporary assignments. For foreigners planning to move to the United States for a temporary work assignment, pre-immigration tax planning is crucial. Whether the goal is to minimize the tax effects of the move or to structure the foreigner worker’s holdings to optimize tax consequences after the move, pre-immigration planning must be undertaken. One of the keys to developing strategies for minimizing U.S. federal tax in pre-immigration context is to understand that many foreign workers accepting a work assignment in the United States will become a U.S. person for U.S. federal tax purposes.Under Internal Revenue Code Section 7701(a)(3)(A), an individual is a U.S. person if…

16Feb 2022 by Anthony Diosdi

Unraveling the United States- Netherlands Income Tax Treaty and the Treaty’s Impact on the Global Taxation of Cross-Border Pension Plans

Tax Law

By Anthony Diosdi The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Netherlands Income Tax Treaty. There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In…

16Feb 2022 by Anthony Diosdi

Unraveling the United States- Germany Income Tax Treaty and the Treaty’s Impact on the Global Taxation of Cross-Border Pension Plans

Tax Law

By Anthony Diosdi The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Germany Income Tax Treaty. There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In…

15Feb 2022 by Anthony Diosdi

Unraveling the United States- Philippines Income Tax Treaty and a Closer Look at the Treaty’s Provision Regarding the Taxation of U.S. Based Retirement Accounts Such as 401K Plans and IRAs

Tax Law

By Anthony Diosdi The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Philippines Income Tax Treaty. There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In…

15Feb 2022 by Anthony Diosdi

Unraveling the United States- Spain Income Tax Treaty and the Treaty’s Impact on the Global Taxation on Cross-Border Pension Plans

Tax Law

By Anthony Diosdi The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Spain Income Tax Treaty. There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In…

15Feb 2022 by Anthony Diosdi

Unraveling the United States- Switzerland Income Tax Treaty and the Treaty’s Impact on the Global Taxation on Cross-Border Pension Plans

Tax Law

By Anthony Diosdi The major purpose of an income tax treaty is to mitigate international double taxation through tax reduction or exemptions on certain types of income derived by residents of one treaty country from sources within the other treaty country. Because tax treaties often substantially modify United States and foreign tax consequences, the relevant treaty must be considered in order to fully analyze the income tax consequences of any outbound or inbound transaction. The United States currently has income tax treaties with approximately 58 countries. This article discusses the United States- Switzerland Income Tax Treaty. There are several basic treaty provisions, such as permanent establishment provisions and reduced withholding tax rates, that are common to most of the income tax treaties to which the U.S. is a party. In…

15Feb 2022 by Lynn Ching

Limited Escape Hatch: Do You Need to File Form 8938 ‘Statement of Specified Foreign Financial Assets’?

Tax Law

By Lynn K. Ching Much has been written about the plethora of Foreign Financial Disclosure Forms and the insanely huge penalties that accompany a failure to file these forms. Form 8938 is one of several such forms which you may be required to file, depending on the facts of your specific circumstance. Basics Certain U.S. taxpayers (citizens, resident aliens, certain non-resident aliens) and specified domestic entities holding certain financial assets 1 outside the United States must report those assets to the IRS generally using Form 8938, ‘Statement of Specified Foreign Financial Assets’. In general, you are obligated to file the Form 8938 if the aggregate value of these assets exceeds $50,000, 2 but in some cases, the threshold may be higher as set forth below. ● Unmarried taxpayers living in…

14Feb 2022 by Anthony Diosdi

A Discussion as to How Foreign Investors Can Use Shared Appreciation Mortgages to Avoid FIRPTA Withholding Associated with the Sale of U.S. Real Estate

Tax Law

By Anthony Diosdi When U.S. real estate became a popular investment with foreign investors in the 1970s, the favorable tax treatment accorded foreign investors in U.S. real property became a domestic political issue. Congress responded in 1980 by enacting the Foreign Investment in Real Property Tax Act of 1980 (or “FIRPTA”), which attempted to equalize the tax treatment of real property gains realized by domestic and foreign investors. Prior to FIRPTA, foreign persons generally were not taxed on gains from the disposition of a U.S. real property interest. Under FIRPTA, gains or losses realized by foreign corporations or nonresident alien individuals from any sale, exchange, or other disposition of a U.S. real property interest are taxed in the same manner as income effectively connected with the conduct of a U.S.…