Tax Law Archives | Page 8 of 55

28Jun 2023 by Anthony Diosdi

The U.S. Taxation of Foreign Computer Programs and Cloud Computing Transactions

Tax Law

By Anthony Diosdi The United States taxes U.S. persons on all of their income, from whatever source derived. Therefore, the source of income generally has no effect on the computation of a U.S. person’s taxable income. Sourcing can, however, have a significant impact on the computation of a U.S. person’s ability to claim a foreign tax credit. The source rules play a more prominent role in the taxation of a foreign person or foreign business, since they effectively define the boundaries of U.S. taxation. The U.S. taxes the gross amount of a foreign person’s or foreign business’s U.S.-source passive type income at a flat rate of 30 percent. The U.S. also taxes foreign persons and foreign businesses at graduated rates on the net amount of income effectively connected with the…

21Jun 2023 by Anthony Diosdi

To Withhold, or Not to Withhold, That is the Question For Foreign Workers

Tax Law

By Anthony Diosdi U.S. companies regularly hire foreign contractors to perform various tasks. U.S. companies often do not consider the potential U.S. withholding tax consequences of retaining a foreign contractor. Many forms of U.S.-source income received by foreign persons is subject to a flat tax of 30 percent on the gross amount of income received. Internal Revenue Code Sections 871(a) (for nonresident aliens) and 881(a) (for foreign corporations) impose the 30-percent tax on “interest * * * dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and income.” This enumeration is sometimes referred to as “FDAP income.” The collection of such taxes is affected primarily through the imposition of an obligation on the person or entity making the payment to…

14Jun 2023 by Anthony Diosdi

Diosdi Ching & Liu, LLP: Experienced San Francisco Tax Law Attorneys

Tax Law

Dealing with tax-related issues can be complex and demanding. At Diosdi Ching & Liu, LLP, we understand this challenge and aim to make the process less daunting for our clients. As seasoned San Francisco tax law attorneys, we offer comprehensive support in a wide range of tax-related matters. Our team is well-versed with the intricate labyrinth of tax laws. We've handled numerous cases, employing innovative strategies to help our clients navigate complex tax situations. Be it a tax dispute, an audit, or an international tax issue, our San Francisco tax law attorneys are equipped to handle it all. What sets us apart at Diosdi Ching & Liu, LLP, is our client-centric approach. We believe that every tax problem is unique, and thus, deserves a unique solution. Our attorneys listen to…

14Jun 2023 by Anthony Diosdi

Can a Foreign Tech Company be Subject to U.S. Tax on Internet-Related Income by Utilizing U.S. Servers?

Tax Law

By Anthony Diosdi The U.S. source rules in general derive from an attempt to identify the geographic locus of the economic activity or financial arrangements that generate income. The source rules play a prominent role in the taxation of foreign persons, since they effectively define the boundaries of U.S. taxation. The source rules for gross income are organized by categories of income, such as interest, dividends, personal services income, rentals, royalties, and gains from the disposition of property. The rapid evolution of electronic commerce and the internet has generated many difficult conceptual issues such as how to source a foreign person’s business activities undertaken on the internet that affect the U.S. economy. The U.S. source rules provide that the source of rental and royalty income is determined by the place…

14Jun 2023 by Anthony Diosdi

A Closer Look at the Benefits of Cross-Border Finance Transactions that are Characterized as Portfolio Debt

Tax Law

By Anthony Diosdi The United States is the world’s top destination for foreign direct investment. 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 a special income tax regime that is applicable to foreign persons. Specifically, if the non-U.S. person receives passive U.S. source income, the income is taxed at a flat 30 percent rate, unless a tax treaty reduces this rate. On the other hand, if the U.S. activities of the foreign investor rises to the level of a “trade or business,” then the foreign person will be taxed at the same graduated tax rates applicable to U.S. persons.Portfolio Debt PlanningForeign investors often utilize portfolio debt…

08Jun 2023 by Anthony Diosdi

A Deep Dive into the FIRPTA Rules

Tax Law

By Anthony Diosdi U.S. real estate has become a popular investment with foreigners. However, few foreign investors fail to consider the U.S. tax implications of holding U.S. real property. There are significant income, gift and estate tax consequences that may result when U.S. real property is sold or transferred. This article discusses the withholding requirements of the Foreign Investment in Real Property Tax Act of 1980 (or “FIRPTA”) and how the FIRPTA withholdings may be reduced or eliminated. Under FIRPTA, gains or losses realized by foreign corporations or nonresident alien individuals from any sale, exchange, or other dispositions of a U.S. real property interest are taxed in the same manner as income effectively connected with the conduct of a U.S. trade or business. This means that gains from dispositions of…

08Jun 2023 by Anthony Diosdi

Do the Anti-Conduit Regulations Delegate Authority to the IRS to Override Tax Treaties?

Tax Law

By Anthony Diosdi Congress in 1993 added Section 7701(l) to the Internal REvenue Code. Section 7701(l) authorizes the Department of Treasury and the Internal Revenue Service (“IRS”) to promulgate regulations which allow for the “recharacterization” of multi-party financing transactions as a transaction directly among two or more of the parties to it if such characterization “is appropriate to prevent avoidance of any tax ***.” The IRS has implemented this authority by issuing “anti-conduit” regulations. The result of the anti-conduit regulations is that intermediate entities (“conduits”) are disregarded in the determination of U.S. taxes on international financing arrangements, which may include loans, leases, and licenses. The key factors that will result in the recharacterization of a conduit entity are:1) The participation of the intermediate entity or entities which reduces the tax…

17May 2023 by Anthony Diosdi

Challenges Associated with the Sourcing of Computer Programs for Purposes of the U.S. Cross-Border Tax Sourcing Rules

Tax Law

By Anthony DiosdiThe source rules play a prominent role in the U.S. taxation of foreign persons, since they effectively define the boundaries of U.S. taxation.Source rules apply in a number of different contexts. One important application of the source rules is the determination of U.S. income tax liability for foreign persons. The U.S. taxes the gross amount of a foreign person’s U.S.-source nonbusiness income at a flat rate of 30 percent. The U.S. also taxes foreign persons at graduated rates on the net amounts of income effectively connected with the conduct of a U.S. trade or business. In other words, the U.S. taxes the U.S.-source income of foreign persons and does not tax a foreign person’s foreign-source income. Sourcing of income can also have a significant impact on a U.S.…

12May 2023 by Anthony Diosdi

Navigating Tax Challenges with a San Francisco Tax Litigation Attorney

Tax Law

Tax issues can be a labyrinth of complexities. Whether it's an IRS audit, a criminal tax investigation, or a tax dispute, these matters require precise legal expertise. If you're in San Francisco, securing the services of a proficient tax litigation attorney is crucial. At Diosdi Ching & Liu, LLP, our team is equipped with the knowledge and experience to guide you through every step of your tax litigation journey. Why Hire a San Francisco Tax Litigation Attorney? San Francisco's tax laws can be intricate and ever-changing. Attempting to tackle these matters alone may lead to detrimental outcomes. This is where the professional assistance of a San Francisco tax litigation attorney becomes indispensable. Our attorneys understand the nuances of local, state, and federal tax laws and can provide the necessary legal…

10May 2023 by Anthony Diosdi

Introduction to the Taxation of Corporate Divisions

Tax Law

By Anthony DiosdiInternal Revenue Code Section 355 allows a corporation to make a tax-free distribution to its shareholders of stock and securities in one or more controlled subsidiaries. Corporate divisions involve the reverse- breaking the investment reflected in one corporation into investments in multiple corporations. The reasons for a corporate division or separation can be varied. A divisive transaction can be either taxable or tax-free. To illustrate a “taxable division,” imagine a corporation with two individual shareholders that has been operating a hotel business and a restaurant business as separate divisions. The corporation might arrange a corporate division simply by distributing the hotel business assets to one shareholder and the restaurant business assets to the other in a complete liquidation. Such a liquidating distribution would be taxable to the shareholders…