Source: http://intltax.typepad.com/intltax_blog/
Timestamp: 2014-11-21 23:57:27
Document Index: 145486424

Matched Legal Cases: ['§402', '§402', '§402', '§ 877', '§ 877', '§ 877', '§ 911', '§ 2503', '§ 2523', '§ 6039', '§956', '§1', '§7874', '§7874', '§368', '§7874', '§368', '§301', '§897', '§1', '§1', '§1445', '§953', '§953', '§6501', '§954', '§1', '§1', '§1', '§1', '§1', '§1', '§877', '§6039', '§1']

Posted on November 20, 2014 in FBAR, Form 3520 / 3520-A, Tax Fraud | Permalink
We recently added a number of new tax quizzes to our sister website, Tax-Charts.com. The new quizzes include the following topics:
Sec. 301, et. seq.: Corporate Distributions
Sec. 331, et. seq.: Corporate Liquidations
Sec. 701-761: Partnerships Misc 1, Partnerships Misc 2, Partnerships Misc 3
Sec. 901, et. seq.: Foreign Tax Credits
Sec. 904: Foreign Tax Credit Limitation
Sec. 1001: Timing/Fact of Sale
General Principles 1, General Principles 2, General Principles 3
U.S. Taxation of Puerto Rico
(the links are to the multiple choice quizzes)
We currently have 39 different quizzes. For each, you can either study the material or test yourself on the topic using a matching quiz, a multiple choice quiz, or flashcards.
If you have any comments or suggestions to improve the quizzes, or for new quiz topics / quiz questions, please email me.
Posted on November 14, 2014 in Foreign Tax Credits, Puerto Rico, Quizzes | Permalink
Last week the IRS released Revenue Procedure 2014-55, which greatly simplifies the U.S. tax treatment of RRSPs and RRIFs. Under U.S. domestic law, a U.S. citizen or resident who is the beneficiary of a foreign retirement plan will generally be subject to current U.S. income taxation on income accrued in the plan even though the income is not currently distributed to the beneficiary, unless the plan is an employees’ trust within the meaning of Code §402(b) and the individual is not a highly compensated employee subject to the rule of Code §402(b)(4)(A).
RRSPs and RRIFs are similar to U.S. Individual Retirement Accounts (“IRAs”). Just as with IRAs, RRSPs and RRIFs have no link to an employee-employer relationship. Consequently, the IRS has not treated RRSPs and RRIFs as “employees’ trusts” under Code §402(b).
Article XVIII(7) of the Canada-U.S. Income and Capital Tax Treaty provides that beneficiaries of RRSPs and RRIFs may defer taxation of any income accrued in but not distributed by the plan. Revenue Procedure 2002-23 provided guidelines for making the election under the Treaty. In 2004, the IRS released Form 8891, U.S Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans. The form allowed individuals to make the deferral election and the form had to be filed on an annual basis.
As indicated above, Revenue Procedure 2014-55 greatly simplifies the treatment of RRSPs and RRIFs. If an individual has not been including in gross income the amount of earnings accrued but not distributed by an RRSP or RRIF, then the individual is generally deemed to have made the deferral election in the first year it could have been made. This change eliminates the cumbersome and costly approach of obtaining a private letter ruling from the I.R.S. to make a late deferral election.
The revenue procedure also makes Form 8891 obsolete. This Form no longer needs to be filed, and no Forms 3520 or 3520-A need to be filed either. However, RRSPs and RRIFs must continue to be included on the FBAR and Form 8938.
Posted on November 02, 2014 in Canada, Foreign Pensions, Form 3520 / 3520-A, Form 8891, Revenue Procedures | Permalink
This week the I.R.S. published Revenue Procedure 2014-16, setting forth inflation adjusted items for 2015. In the international arena, some of the important inflation adjustments include:
$160,000 --- Code § 877(a)(2)(A) --- The average annual net income tax that must be imposed for the five taxable years ending before the date of the loss of United States citizenship (or cessation of long-term permanent residency) for an individual to be considered a “covered expatriate” under Code § 877A(g)(1). This amount is up from $157,000 in 2014. See Rev. Proc. 2013-35.$690,000 --- Code § 877A(a)(3) --- The amount that can be excluded from the mark-to-market gain upon expatriation of a covered expatriate. This amount is up from $680,000 in 2014. See Rev. Proc. 2013-35.$100,800 --- Code § 911(b)(2)(D)(i) --- Foreign earned income exclusion. This amount is up from $99,200 in 2014. See Rev. Proc. 2013-35.$14,000 --- Code § 2503 --- The amount of the annual gift tax exclusion for gifts to any person. This amount the same as in 2014. See Rev. Proc. 2013-35. $147,000 --- Code § 2523(i) --- The amount of the annual gift tax exclusion for gifts to non-citizen spouses. This amount is up from $145,000 in 2014. See Rev. Proc. 2013-35. $15,601 --- Code § 6039(F) --- Notice of large gifts received from foreign persons. This amount is up from $15,358 in 2014. See Rev. Proc. 2013-35.
Posted on November 02, 2014 in Inflation Adjustments | Permalink
Posted on October 24, 2014 in Expatriation | Permalink
Posted on October 17, 2014 in Quizzes, Source of Income | Permalink
Posted on October 14, 2014 in Quizzes | Permalink
Famous Tax Quote: Taxing Citizens by Reason of Citizenship
The United States was historically and continues to be virtually unique in taxing its citizens, wherever resident, on their worldwide income, solely by reason of their citizenship.
Crow v. Commr., 85 T.C. 376 (1985)
Posted on October 03, 2014 in Expatriation, Famous Tax Quotes | Permalink
Famous Tax Quote: "Maxims" & "Minims"
We do not quarrel with the maxim that substance must prevail over form, but this proposition marks the beginning, not the end, of our inquiry. The court in Sheppard v. United States * * * perceptively remarked that “all such ‘maxims’ should rather be called “minims' since they convey a minimum of information with a maximum of pretense.” * * * Each case requires detailed consideration of its unique facts.
Grove v. Commr., 490 F.2d 241 (2d Cir. 1973)
Posted on September 28, 2014 in Famous Tax Quotes | Permalink
Posted on September 22, 2014 in FATCA, Form W-8 BEN, U.S. Withholding Taxes | Permalink
Posted on September 22, 2014 in Foreign Tax Credits, PLRs / CCAs, Treaties | Permalink
Posted on September 10, 2014 in Famous Tax Quotes | Permalink
International PLRs of Note for the 36th week of 2014 Today the IRS published the following Chief Counsel Advice relating to international taxation.
CCA 201436047 - Accrued but unpaid interest on an obligation that is U.S. property within the meaning of Code §956 is itself also U.S. property.
Posted on September 05, 2014 in 956 Investments in U.S. Property, PLRs / CCAs | Permalink
The CCA provided that a reduced rate of withholding on portfolio interest can be established after payments are made if a withholding certificate or documentary evidence is provided before the expiration of the period of limitation for claiming a refund of tax with respect to such interest. Treas. Reg. §1.871-14(c)(3)(i). Because A did not file a U.S. tax return, A's period of limitation could not have started, so the documentation can be obtained at any time. However, because B did file a U.S. tax return, the withholding agent generally has three years from the date the return was filed to obtain documentation supporting the portfolio interest. Posted on August 22, 2014 in Form W-8 BEN, PLRs / CCAs, U.S. Withholding Taxes | Permalink
Last week the IRS released PLR 201432002, where it applied the anti-inversion rules of Code §7874.
The IRS ruled that a newly formed foreign corporation was not a surrogate foreign corporation (i.e., there was no inversion) under Code §7874 where it acquired a U.S. corporation from a foreign corporation in a Code §368(a)(1)(F) reorganization that was followed by a private placement and an IPO. The shares of the new foreign corporation were excluded from the numerator and the denominator of the ownership fraction (under the "internal group restructuring" exception) and the private placement and IPO shares were excluded from the denominator (under the "anti-stuffing" rules). This produced an ownership fraction of zero over zero. The ownership requirement was not met and there was no surrogate foreign corporation.
An image of the chart is shown below and the chart can be viewed as a PDF file here: PLR 201432002.
For some recent commentary on inversions, visit Paul Caron's TaxProf Blog.
Posted on August 19, 2014 in 7874 Inversions, Corporate Reorgs, PLRs / CCAs, Situational Charts | Permalink
Posted on August 15, 2014 in Famous Tax Quotes | Permalink
Last week the IRS published the following Private Letter Ruling and Chief Counsel Advice relating to international taxation.
PLR 201432002 - A newly formed foreign corporation was not a surrogate foreign corporation (i.e., there was no inversion) under Code §7874 where it acquired a U.S. corporation from a foreign corporation in a Code §368(a)(1)(F) reorganization that was followed by a private placement and an IPO. The shares of the new foreign corporation were excluded from the numerator and the denominator of the ownership fraction (under the "internal group restructuring" exception) and the private placement and IPO shares were excluded from the denominator (under the "anti-stuffing" rules). This produced an ownership fraction of zero over zero. The ownership requirement was not met and there was no surrogate foreign corporation. CCA 201432020 - Failure to file a Form 5471 keeps the period of limitations for assessment of tax open for the entire tax return. For a discussion of the statute of limitations and international reporting requirements, see our post here.
Posted on August 14, 2014 in 7874 Inversions, Corporate Reorgs, Form 5471, PLRs / CCAs, Statute of Limitations | Permalink
Below are two graphs which reflect the latest expatriation data. The first graph shows the quarterly number of published expatriates since 2008. The second graph shows the quarterly average of published expatriates per year through the second quarter of 2014. For our prior coverage of expatriation, see all posts tagged Expatriation.
Posted on August 06, 2014 in Expatriation | Permalink
Posted on July 28, 2014 in 901(m) Covered Asset Acquisitions, Foreign Tax Credits, Notices, Situational Charts | Permalink
Posted on June 23, 2014 in Foreign Earned Income Exclusion, Quizzes, Source of Income | Permalink
Posted on June 13, 2014 in Tax Fraud | Permalink
Matching Quizzes and Flashcards
About a month ago we launched a new component to our sister website, Tax-Charts.com. We created multiple choice quizzes to test your tax knowledge on various topics. We have now added matching quizzes and flashcards for the same materials. The quizzes can be found here.
I personally like the matching quizzes the most. As mentioned earlier, the quizzes work well on mobile devices.
We will be adding new quizzes in the coming months.
Posted on June 09, 2014 in Quizzes | Permalink
Posted on May 20, 2014 in 956 Investments in U.S. Property, Partnerships, PLRs / CCAs, Situational Charts | Permalink
Tax Quizzes --- Test Your Tax Knowlege
Today we launched a new component to our sister website, Tax-Charts.com. You can now test your tax knowledge with quizzes. Currently there are 12 quizzes on subjects ranging from basic tax knowledge, such as Form 1040 schedules, to advanced tax knowledge, such as partnership code sections.
We will be adding quizzes that test your knowledge of significant tax cases. As a starting point, we have included a quiz dealing with the 11 cases discussed in Tax Stories, by Paul Caron of TaxProf Blog. We expect to add new quizzes and will announce the new additions here on International Tax Blog.
The quizzes also work well on mobile devices.
When you visit Tax-Charts.com, be sure to view our selection of our free tax flowcharts.
Posted on May 06, 2014 in Tax Quizzes | Permalink
Posted on May 01, 2014 in Expatriation | Permalink
Posted on April 15, 2014 in Foreign Earned Income Exclusion, Form 2555, Section 911 Housing Cost Amounts | Permalink
Posted on March 27, 2014 in Foreign Earned Income Exclusion, Sec. 911 Adverse Conditions | Permalink
One of the first transactions involved making entity classification ("check-the-box") elections for the foreign holding corporations to treat them as disregarded entities, which would trigger a deemed liquidation of those entities. Treas. Reg. §301.7701-3(g)(1)(iii). These deemed liquidations and subsequent transactions would involve distributions of U.S. corporations. Not mentioned in the PLR, and often overlooked by foreign shareholders of U.S. corporations, are the requirements of the Foreign Investment in Real Property Act ("FIRPTA"). Under FIRPTA, a U.S. corporation is presumed to be a U.S. real property holding corporation ("USRPHC"), and therefore U.S. real property interest ("USRPI"). Code §897(c)(1)(A)(ii). The presumption can be rebutted if the transferor receives a statement from the U.S. corporation that it is not a USRPI. Treas. Reg. §1.897–2(g)(1)(i)(A). The U.S. corporation must also notify the IRS that a foreign shareholder made the USRPI inquiry. Treas. Reg. §1.897–2(h)(2). Distributions of USRPIs by foreign corporations can trigger a requirement to withhold 10% withholding under Code §1445(a). An image of the chart is shown below and the chart can be viewed as a PDF file here: PLR 201411006.
Posted on March 18, 2014 in Corporate Reorgs, FIRPTA, PLRs / CCAs, Situational Charts | Permalink
AM2014-002 - A foreign corporation made an election under §953(d) to be treated as a domestic corporation. During an examination, the IRS concluded that the foreign corporation would not qualify as an insurance company if it were a domestic corporation. As a result, the Code §953(d) election was invalid, and the foreign corporation was a controlled foreign corporation ("CFC"). Because the foreign corporation was a CFC, Form 5471 had to be filed by its U.S. shareholders. The form was not filed, so the period of limitation for assessment of tax remained open and would continue to be open until three years after the Form 5471 was filed. Code §6501(c)(8). The Form 5471 filing obligations were not satisfied by the CFC's filing of Form 1120-PC.
Posted on March 13, 2014 in 953(d), Form 5471, PLRs / CCAs | Permalink
International PLRs for the 7th and 8th week of 2014 For the 7th and 8th weeks of 2014, the IRS published the following Private Letter Rulings relating to international taxation.
PLR 201407010, PLR 201408024 - A domestic parent corporation with a CFC operating as an insurance company may use certain statements funished to the insurance regulatory agency in the foreign country to measure income within Code §954(i)(4)(B)(ii).
There were no international PLRs of note for the 6rd week of 2014.
Posted on February 22, 2014 in PLRs / CCAs, Subpart F Income | Permalink
Famous Tax Quote – Can’t Have Your Cake and Eat It Too
[The taxpayer] cannot retain his cake and consume it as well.
Eagan v. U.S., 80 F.3d 13 (1st Cir. 1996)
Posted on February 22, 2014 in Famous Tax Quotes | Permalink
Janis v. Commr., 461 F.3d 1080 (9th Cir. 2006)
Posted on February 20, 2014 in Famous Tax Quotes | Permalink
Posted on February 18, 2014 in Form 3520 / 3520-A, Form 5471, Form 5472, Form 8621, Form 8858, Form 8865, Form 8938, Form 926, Statute of Limitations | Permalink
[E]xpatriation is a serious act that should be undertaken with a full understanding of the consequences.
Dacey v. Commr., TC Memo 1992-187.
Posted on February 16, 2014 in Expatriation, Famous Tax Quotes | Permalink
Below are five new situational charts of examples found in Treas. Reg. §1.1361-5(a)(4). The examples apply the QSub requirements to five different situations and illustrate when a QSub election may be terminated. Images of the charts are shown below and links to PDFs of the charts are also available:
Treas. Reg. §1.1361-5(a)(4) Example 1,
Treas. Reg. §1.1361-5(a)(4) Example 2,
Treas. Reg. §1.1361-5(a)(4) Example 3,
Treas. Reg. §1.1361-5(a)(4) Example 4,
Treas. Reg. §1.1361-5(a)(4) Example 5.
For some recent commentary on S Corporations, visit Paul Caron's TaxProf Blog.
Posted on February 14, 2014 in S Corporations, Situational Charts | Permalink
Last week the IRS released the names of individuals who renounced their citizenship or terminated their long-term U.S. residency. People often wonder how the I.R.S. receives the data and whether the list only includes individuals who are subject to the “exit tax.” Section 6039G(d) of the Internal Revenue Code (the “Code”) provides that the individuals listed in the Federal Register include:
The I.R.S. is required to publish the names of the individuals losing United States citizenship “with respect to whom the [I.R.S.] receives information under the preceding sentence * * *.” The preceding sentence lists three sources from which the I.R.S. receives information. Source One – Form 8854
First, “any Federal agency or court which collects * * * the statement under subsection (a) shall provide” certain information to the I.R.S. The statement under subsection (a) is required only for individuals subject to the special rules of Code §§877(a) or 877A (such as the exit tax). However, if an individual does not certify that he has met his U.S. tax filing requirements for 5 years, the individual will be subject to those special rules. Form 8854, Initial and Annual Expatriation Information Statement, serves both the purpose of allowing an individual to certify that he or she has met his or her U.S. tax filing requirements for 5 years (see Part IV, Section A, Question 6 of Form 8854), and also serves the purpose of providing the statement required by Code §6039G(a).
Thus, under the first source of information, the I.R.S. must provide to itself the Forms 8854 that have been filed by taxpayers. We believe that all individuals that have filed a Form 8854 should be included in the Federal Register, because the form is only required for individuals losing their United States citizenship (as defined above). Source Two - Certificate of Loss of Nationality (“CLN”)
Posted on February 12, 2014 in Expatriation | Permalink
Posted on February 06, 2014 in Expatriation | Permalink
Today we published a new video discussing the new FBAR (FinCEN Form 114). The video is embedded below.
Posted on February 05, 2014 in FBAR, Videos | Permalink
International PLRs for the 5th week of 2014 Last Friday the IRS published the following Private Letter Rulings relating to international taxation.
Posted on February 05, 2014 in Branch Profits Tax, PLRs / CCAs | Permalink
International PLRs for the 4th week of 2014 Last Friday the IRS published the following Chief Counsel Advice relating to international taxation.
CCA 201404011 - In the context of an OVDI where a taxpayer has filed an amended return and made an overpayment of tax, the IRS cannot credit the overpaid amount to the penalty balance of another tax year. The filing of an amended return does not revive the period of limitation on assessment or refund.
There were no international PLRs of note for the 3rd week of 2014.
Posted on January 27, 2014 in PLRs / CCAs | Permalink
Posted on January 24, 2014 in 355 Spin-Offs, Situational Charts | Permalink
Today we have added a new resource page to the blog: 2013 developments in U.S. international tax. The page lists and summarizes the significant cases, administrative materials (regulations, announcements, notices, etc) released by the IRS, and other 2013 developments related to U.S. international tax.
The resources section is located on the right hand side of the page just below Tax Blogs. Posted on January 17, 2014 in Resources | Permalink
The regulations include four examples which apply the filing requirement rules and exceptions. We have created charts for each of the examples. Images of the charts are shown below and links to PDFs of the charts are also shown:
Posted on January 15, 2014 in Form 8621, PFICs, Situational Charts | Permalink
International PLRs for the 2nd week of 2014 Last Friday the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation.
PLR 201402001 - Application of the "matching rule" of Treas. Reg. §1.1502-13(c) intercompany gain within a consolidated group. CCA 201402003 - In an OVDI context, the CCA held that there was no extension of the statute of limitations under section 6511 on issuing refunds where the I.R.S. received the taxpayer’s statutory extension (Form 872) prior to the expiration of the assessment period, but the I.R.S. failed to execute the Form 872 prior to the expiration of the assessment period. After the assessment period expired, the taxpayer filed a claim for refund.
Posted on January 12, 2014 in Form 3520 / 3520-A, Form 5471, PLRs / CCAs | Permalink
Posted on January 09, 2014 in 351 Exchanges, Flowcharts | Permalink
Posted on January 08, 2014 in Flowcharts, Form 8621, PFICs | Permalink
There were no Private Letter Rulings published this week relating to international taxation.
Posted on January 03, 2014 in PLRs / CCAs | Permalink