The General Treaty Provisions That All Individual Foreign Investors Should Consider Before Investing in the United States

The General Treaty Provisions That All Individual Foreign Investors Should Consider Before Investing in the United States

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By Anthony Diosdi Introduction In the individual foreign investor setting, inbound tax planning often requires a balancing of U.S. income tax considerations and U.S. federal gift and estate tax considerations. While U.S. federal income tax rates on the taxable income of an individual foreign investor are the same as those applicable to a U.S. citizen or resident, the federal estate and gift tax as applied to individual foreign investors can and often results in a dramatically higher burden on a taxable U.S. estate or donative transfer of a foreign investor than for a U.S. citizen or domiciliary. As a result, for many individual foreign investors, the most important U.S. tax consideration is the U.S. federal estate and gift taxation. The United States imposes estate and gift taxes on certain transfers…
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“BEAT” Again- The New BEAT Tax Regime Considerations and Compliance Requirements Imposed on U.S.  Inbound Transactions Involving Foreign Corporate Parents

“BEAT” Again- The New BEAT Tax Regime Considerations and Compliance Requirements Imposed on U.S. Inbound Transactions Involving Foreign Corporate Parents

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By Anthony Diosdi Introduction to the BEAT Tax Regime The 2017 Act introduced the Base Erosion Anti-Abuse tax (“BEAT”) as codified under Internal Revenue Code Section 59A, which is designed to prevent base erosion in the crossborder context by imposing a type of alternative minimum tax, which is applied by adding back to taxable income certain deductible payments, such as interest and royalties, made to related foreign persons. As a threshold matter, the BEAT provisions generally do not apply to small to medium-sized “C” corporation structures but will apply to applicable “C” corporation groups that have average annual gross receipts for a three-taxable year look back period period ending with the preceding year of at least $500 million.  (BEAT does not apply to Regulated Investment Companies (“RIC”) and Real Estate…
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Just in Time for Tax Season: Change to IRS Form 5471

Just in Time for Tax Season: Change to IRS Form 5471

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By Anthony Diosdi Introduction  Subpart F of the Internal Revenue Code requires every person who is a U.S. shareholder of a controlled foreign corporation (or “CFC”), and who owns stock in such corporation to include in gross income a deemed dividend equal to the shareholder’s pro rata share of the CFC’s earnings. In order to provide the Internal Revenue Service (“IRS”) with the information necessary to ensure compliance with Subpart F, each year, a U.S. shareholder who owns a certain portion of a foreign corporation’s vote and/or value must file a Form 5471 entitled “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” A Form 5471 ordinarily is filed by attaching it to the U.S. shareholder’s regular federal income tax return. A U.S. shareholder of a CFC that…
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