tax law Archives | Page 24 of 30

21Nov 2019 by Anthony Diosdi

Tax Tips for the End of the Year

Tax Law

As 2019 comes to a close, so does the tax year. With a month left in the year, there are still some moves you can make to decrease your tax liability come spring. Deferring Income You will owe taxes on the income you receive in 2019, though in many cases, it might be possible to put off income until after the New Year. Even if you earned income in 2019, you will not pay taxes on it this year if you do not receive the funds until 2020. Deferring year-end bonuses, commissions, or other earnings until January can decrease your liability for 2019. Accelerate Deductions As you defer income, you also might seek possible last-minute deductions to lower your bill even further. Some possible deductions might include: Charitable contributionsPaying estimated…

15Nov 2019 by Anthony Diosdi

Demystifying the IRS Form 5471 Part 5. Schedule I-1

Tax Law

By Anthony Diosdi Each year certain U.S. persons with interests in foreign corporations must file an IRS Form 5471 otherwise known as “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” This is the fifth of a series of articles designed to provide a basic overview of the Form 5471. This article will focus on Schedule I-1, and is designed to supplement the IRS instructions to Schedule I-1.Who Must Complete the Form 5471 Schedule JSchedule I-1 is used to report information determined at the CFC level with respect to amounts used in the determination of GILTI inclusions by U.S. shareholders. The information from Schedule I-1 is used by U.S. shareholder(s) of a CFC to file Form 8992, U.S. Shareholder Calculation of GILTI, and may assist in the completion…

15Nov 2019 by Anthony Diosdi

Despite the Enactment of the 2017 Tax Cuts and Jobs Act, the High-Taxed Exception to Subpart F Income Continues to Allow CFC’s to Defer Foreign Income From U.S. Taxation

Tax Law

By Anthony Diosdi The Revenue Act of 1962 enacted Subpart F of the Internal Revenue Code. The 1962 Revenue Act adopted the mechanism of taxing U.S. shareholder on their pro rata shares of the controlled foreign corporation’s (“CFC”) undistributed income as if those shares of income had been distributed as dividends. In general, the purpose of subpart F is to discourage U.S. taxpayers from using foreign corporations to defer U.S. taxes by accumulating certain types of income in foreign “base” companies located in low-tax jurisdictions. Subpart F is primarily directed at two types of income: passive investment income and income derived from dealings with related corporations (i.e., using a base company to shift income away from related parties).The basic operation of the subpart F provisions is straightforward: certain U.S. taxpayers…

07Nov 2019 by Anthony Diosdi

The Taxation of Offshore Accumulated Earnings under Section 959- Before and After the 2017 Tax Cuts and Jobs Act

Tax Law

By Anthony Diosdi Generally, U.S. shareholders of a controlled foreign corporation or CFC are required to include in the U.S. income: 1) their pro rata share of subpart F income under Internal Revenue Code Section 951(a) (such as passive income, and certain foreign sales and service income); 2) their pro rata share of CFC’s earnings from investments in U.S. property as defined in Internal Revenue Code Section 956; 3) after the enactment of the 2017 Tax Cuts and Jobs Act, other items of global intangible low-taxed income (“GILTI”) as defined in Internal Revenue Code Section 951A. The U.S. shareholder is taxed even if the CFC does not make an actual distribution to the shareholder. To avoid double taxation, Internal Revenue Code Section 959 provides that previously taxed earnings and profits…

07Nov 2019 by Anthony Diosdi

The Importance of Determining Accurate Earnings and Profits of Foreign Corporations for U.S. Tax Compliance Purposes

Tax Law

By Anthony Diosdi When we think about international tax or cross border transactions, we think about the controlled foreign corporation or CFC rules. We also consider subpart F income or global intangible low-taxed income (“GILTI”) planning. Unfortunately, many international tax professionals do not give much consideration to the “earnings and profits” (“E&P”) of a controlled foreign corporation or CFC. The importance of E&P in international tax should not be ignored. Not only is E&P the foundation of cross-border income inclusions, recent changes to the rules governing U.S. international tax compliance make having an accurate E&P more important now than ever. The precise definition of the term E&P is nowhere to be found in the Internal Revenue Code or its regulations. The function of E&P, however, is clear: it is a…

23Oct 2019 by Lynn Ching

Demystifying the IRS Form 5471 Part 4. Schedule J

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the subpart F rules and global intangible low-taxed income (“GILTI”) provisions, each year certain U.S. persons with interests in foreign corporations must file an IRS Form 5471 otherwise known as “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” This is the fourth of a series of articles designed to provide a basic overview of the Form 5471. This article will focus on Schedule J. Schedule J tracks the earnings and profits of a controlled foreign corporation (“CFC”). This article is designed to supplement the IRS instructions to Schedule J. Schedule J has dramatically changed for the 2018 tax season. Schedule J now includes Part 1 entitled “Accumulated…

16Oct 2019 by Anthony Diosdi

Do Not Risk Losing Your Right to Travel Due to Unpaid Taxes

Tax Law

Having substantial unpaid tax debt can weigh on your mind, and the stress can even impact your day-to-day life. However, if you want to travel on an international vacation to get away from your everyday stresses for a week, you may have even bigger concerns courtesy of the Internal Revenue Service (IRS). In recent years, IRC Section 7345F passed, which allowed for the revocation or denial of a United States passport for individuals with significant unpaid tax bills. In 2018, the IRS issued direction to the State Department to enact this method of tax enforcement. The new law will not affect everyone with past-due taxes. Instead, the following must be true for your passport to be in jeopardy: You owe more than $50,000 in legally-enforceable unpaid taxes (Title 26 liabilities…

07Oct 2019 by Anthony Diosdi

Demystifying the IRS Form 5471 Part 3. Schedule E

Tax Law

In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the subpart F rules and global intangible low-taxed income (“GILTI”) provisions, each year certain U.S. persons with interests in foreign corporations must file an IRS Form 5471 otherwise known as “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” This is the third of a series of articles designed to provide a basic overview of the new Schedule E of the Form 5471. A controlled foreign corporation (“CFC”) paying a foreign tax and/or claiming a foreign credit must complete Schedule E of the Form 5471. This article is heavily based on the instructions to Schedule E of the Form 5471.Who Must Complete the Form 5471 Schedule EIndividuals with interests in CFCs…

02Oct 2019 by Lynn Ching

Demystifying the IRS Form 5471 Part 2. Schedule C

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the subpart F rules and global intangible low-taxed income (“GILTI”) provisions, each year certain U.S. persons with interests in foreign corporations must file an IRS Form 5471 otherwise known as “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” This is the second of a series of articles designed to provide a basic overview of the new Schedule C of the Form 5471. Who Must Complete the Form 5471 Schedule C Schedule C of a Form 5471 is an income statement of a controlled foreign corporation (“CFC”). The Schedule C is designed to disclose a CFC’s functional currency and transactions in foreign currency. Because foreign currencies are treated…

26Sep 2019 by Anthony Diosdi

Demystifying the IRS Form 5471 Part 1. Selecting the Proper Category of Filer and Preparing Schedule B

Tax Law

By Anthony Diosdi In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with the subpart F rules and global intangible low-taxed income ( “GILTI”) provisions, each year certain U.S. persons with interests in foreign corporations must file an IRS Form 5471 otherwise known as “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” This is the first of a series of articles designed to provide a basic overview of the Form 5471 and the tax law anyone completing a Form should understand. The Form 5471 begins with a question on Page 1 Box B by asking you to select one or more categories of being a filer. The classification selected will determine the appropriate schedules of the Form 5471 that needs…