Tax Law Archives | Page 4 of 56

29Jan 2024 by Anthony Diosdi

The 962 Election vs. The High-Tax Exception: The Epic Showdown

Tax Law

By Anthony Diosdi Prior to the enactment of the 2017 Tax Cuts and Jobs Act, Controlled Foreign Corporations (“CFCs”) were able to defer the U.S. taxation of foreign source income through tax planning. The 2017 Tax Cuts and Jobs Act significantly reduced (but did not eliminate) a CFC’s U.S. shareholder’s ability to defer the U.S. taxation of foreign source income. This article will discuss two remaining options available to CFC shareholders to defer the recognition of U.S. tax on foreign source income. CFC shareholders can make either a so-called 962 election or a high-tax exception (also known as a Section 954 election) to defer the taxation on foreign income. This article will compare and contrast each of these elections.Section 962 ElectionInternal Revenue Code Section 962 allows an individual U.S. shareholder…

29Jan 2024 by Anthony Diosdi

The IRS Form 5471 Category Filer Rules

Tax Law

By Anthony Diosdi Form 5471 is used by certain U.S. persons who are officers, directors, or shareholders in respect of certain foreign entities that are classified as corporations for U.S. tax purposes. The Form 5471 and schedules are used to satisfy the reporting requirements of Internal Revenue Code Section 6038 and 6046 along with the applicable regulations.Substantively, it backstops various international sections of the Internal Revenue Code including Sections 901/904 (Code Section 901 and 904 provide rules governing foreign tax credits), Section 951(a) (Section 951a provide rules governing Subpart F income and Section 956. Generally, a U.S. shareholder of a foreign corporation must include in income his or her pro rata share of the foreign corporation’s increase in its earnings and profits in U.S. property), Section 951A (Section 951A provides…

29Jan 2024 by Anthony Diosdi

Tracking Form 5471 Section 959 PTEPs of the Modern Day CFC

Tax Law

By Anthony Diosdi Before enactment of the 2017 Tax Cuts and Jobs Act (“TCJA”), the Internal Revenue Service (“IRS”) Form 5471 was a reasonable exercise. Prior to the enactment of the TCJA, the IRS Form 5471 was approximately two pages long. This all changed with the enactment of the TCJA. The days of preparing two page long Form 5471s are long gone. The IRS Form 5471 along with its accompanying Schedule J, Schedule P, and Schedule E-1 have become incredibly difficult to prepare. This is the result of the complexity and incompleteness of the TCJA’s international tax provisions, along with congressional failure to remedy the gaps that TCJA created in the Internal Revenue Code. Thus, the Department of Treasury (“Treasury”) and the IRS are left to bridge the gaps in…

29Jan 2024 by Anthony Diosdi

A Basic Guide to GILTI

Tax Law

By Anthony Diosdi For years, tax planning for international outbound taxation remained the same, mitigation of Subpart F income, maximization of foreign tax credits, and transfer pricing. The 2017 Tax Cuts and Jobs Act has broken the monotony associated with international tax planning for outbound transactions and added a new category for tax planning. In addition to the anti-deferral regime built into Subpart F, the Tax Cuts and Jobs Act has introduced a new anti-deferral category known as the Global Intangible Low-Tax Income (“GILTI”).GILTI is a provision that can be found in Internal Revenue Code Section 951A. The Tax Cuts and Jobs Act requires a U.S. shareholder of a controlled foreign corporation (“CFC”) to include in income its global intangible low-taxed income or GILTI. The GILTI tax is meant to…

22Jan 2024 by Anthony Diosdi

San Francisco Tax Lawyers: Expertise That Counts

Tax Law

In the intricate and often challenging world of taxation, having the right legal assistance is crucial. San Francisco, with its complex tax landscape, demands a high level of expertise and experience from its tax lawyers. At Diosdi & Liu, LLP, our team of dedicated San Francisco tax lawyers stands ready to offer unparalleled service and guidance. Why Choose Diosdi & Liu, LLP in San Francisco? In the bustling economic environment of San Francisco, tax issues can be diverse and complicated. Whether you're a business owner, an individual taxpayer, or facing an IRS audit, our tax lawyers are equipped with the knowledge and experience to handle your case effectively. Comprehensive Tax Services Our services cover a wide range of tax-related matters. From tax planning and compliance to resolving tax disputes and litigation, we…

20Dec 2023 by Anthony Diosdi

How is a Sentence Determined in a Criminal Tax Case?

Tax Law

By Anthony Diosdi The most frightening part of being a defendant in a criminal tax case is the potential penalties. This article provides a brief overview as to how a court determines a sentence after a defendant is convicted of a federal tax crime (such as tax evasion or filing a false tax return) by either pleading guilty to a charge, or by being found guilty after a trial. This article is based on the Criminal Tax manual published by the Depart of Justice.In 2005, the United States Supreme Court significantly altered the federal sentencing landscape when it decided United States v. Booker, 543 U.S. 220 (2005). From 1987 until 2005, federal sentencing had been governed by the mandatory application of the United States Sentencing Guidelines or (“Guidelines”). The Guidelines…

20Dec 2023 by Anthony Diosdi

Can a CFC Shareholder Pledge CFC Shares as Security for a Loan?

Tax Law

By Anthony Diosdi Internal Revenue Code Section 956 provides that a U.S. Shareholder must include his or her income his or her pro rata share of a controlled foreign corporation’s (“CFC”) increase in its earnings and profits (“E&P”) in U.S. property for the taxable year. This section of the Internal Revenue Code is an anti-abuse rule, designed to prevent the enjoyment of the benefit of repatriation to the U.S. of untaxed foreign earnings through reinvestment here. For purposes of Section 956, U.S. property includes most tangible and intangible property owned by the CFC. In enacted Section 956, Congress concluded that if any CFC loaned its accumulated earnings to its U.S. shareholders, earnings to the U.S. shareholders had occurred and, consequently, the loan should be treated as a constructive dividend. This…

20Dec 2023 by Anthony Diosdi

What is an Initial Appearance/Arraignment in a Federal Criminal Tax Case?

Tax Law

By Anthony Diosdi When an individual is charged with most crimes, the focus of an investigation by law enforcement is typically directed to a limited historical event. Questions of where the defendant was on the night in question, what his or her relationship to the victim, whether he or she had any motive to commit the alleged crime can be pursued immediately by both the prosecution and the defense. Criminal tax cases are different. Most criminal investigations start with a defendant and seek a crime. The question is not whether the defendant did something wrong; it is whether the defendant did anything wrong. Any crime involving tax can result in criminal prosecution, whether it was committed yesterday or five years ago. As a result, criminal tax investigations can take years.If…

14Dec 2023 by Anthony Diosdi

San Francisco Tax Lawyers: Your Allies in Complex Tax Matters

Tax Law

In the intricate world of tax law, having a skilled San Francisco tax lawyer by your side is more than a convenience—it's a necessity. At Diosdi Ching & Liu, LLP, we specialize in providing comprehensive tax services, guiding our clients through the complexities of tax laws with expertise and precision. The Role of Expert Tax Lawyers in San Francisco The landscape of tax law is continually evolving, and San Francisco's economic diversity adds another layer of complexity. Whether you're dealing with individual tax planning, business tax concerns, or facing an IRS audit, the role of an experienced tax lawyer is indispensable. Learn more about our tax services. Addressing a Spectrum of Tax Needs At Diosdi Ching & Liu, LLP, our team of seasoned San Francisco tax lawyers is equipped to handle…

13Dec 2023 by Anthony Diosdi

The Application of the Anti-Conduit and Anti-Hybrid Regulations to Hybrid Entities and Hybrid Instruments

Tax Law

By Anthony Diosdi The Internal Revenue Service (“IRS”) has issued final regulations (T.D. 8611) relating to conduit financing arrangements under authority granted by Section 7701(l). These regulations were effective September 10, 1995. Under the anti-conduit regulations, the IRS may disregard the participation of a conduit entity and recharacterize separate financing transactions to which a conduit is a party as a direct financing between the ultimate provider and ultimate recipient of the financing. For such an intermediate entity to be a conduit: 1) there must be two or more “financing” transactions linked by the common “immediate entity” or group of related entities (i.e., “financing arrangement”), 2) the participation of the intermediate entity must have the effect of reducing U.S. tax, and 3) the participation of the intermediate entity must be pursuant…