U.S. income tax laws can be challenging for U.S. citizens who live outside of the U.S. This is particularly true for airline pilots who accept jobs overseas. The recent Acone v. Commissioner, T.C. Memo. 2017-162, case addresses the challenge of determining whether an airline pilot stationed overseas qualifies for the Section 911 foreign income exclusion.… Continue reading Airline Pilot Stationed Overseas Not Entitled to Section 911 Foreign Income Exclusion
Category: International Tax
Intercompany Receivable Results in Section 956 Inclusion for U.S. Corp.
The Subpart F rules can result in foreign profits being subject to tax in the U.S. In the recent Crestek v. Commissioner, 49 T.C. 5 (2017), the court addresses unpaid advances a controlled foreign corporation made to its U.S. parent. The case shows how easy it is for a U.S. corporation that has an outbound transactions to… Continue reading Intercompany Receivable Results in Section 956 Inclusion for U.S. Corp.
No Tax Due on Foreign Corporation’s Redemption of U.S. Partnership Interest
Many businesses that operate outside of the U.S. want to do business in the U.S. and they want to limit their exposure to U.S. income taxes. To do this, many in-bound investments are structured as U.S. partnerships with the parntership being formed in the U.S. to carry on the business activities in the U.S. This… Continue reading No Tax Due on Foreign Corporation’s Redemption of U.S. Partnership Interest
U.S. Foreign Tax Credit Not Impacted by Repayment of Foreign Tax Refund
The tax assessment and collection process in most foreign countries is markedly different than the process in the U.S. These differences can present a number of challenges for U.S. citizens who reside in foreign countries. In Sotiropoulos v. Commissioner, T.C. Memo. 2017-75, the court considered one of these challenges, namely, how does one determine whether… Continue reading U.S. Foreign Tax Credit Not Impacted by Repayment of Foreign Tax Refund
Court Decides Transfer Pricing Buy-in Payment Case
The transfer pricing disputes often involve transfers of property offshore. Taxpayers make these transfers so that the post-transfer profits earned from the offshored property are not subject to tax in the U.S. or, in many cases, not subject to tax in the foreign countries either. The U.S. Tax Court recently decided Amazon Inc. v. Commissioner,… Continue reading Court Decides Transfer Pricing Buy-in Payment Case
TIGTA Suggests IRS Follow Transfer Pricing Roadmap
Transfer pricing is and has been the most significant and difficult issue the IRS audits. The audits are typically closed with the IRS agents proposing unreasonably large adjustments and IRS appeals sustaining a very low percentage of the adjustments. The IRS has not been very successful in litigating transfer pricing cases either. As a result,… Continue reading TIGTA Suggests IRS Follow Transfer Pricing Roadmap
Tax on Nonresident Alien Gambling Winnings
Are non-resident aliens who receive gambling winnings while visiting the U.S. able to deduct the gambling expenses incurred in earning the gambling winnings? And can they avoid the withholding tax on their gambling winnings? The court addresses these issues in Park v. Commissioner, 136 T.C. 569 (T.C. 2011). Facts & Procedural History The taxpayers are… Continue reading Tax on Nonresident Alien Gambling Winnings
Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit
In Deere & Company v. Commissioner, 133 T.C. No. 11, the U.S. Tax Court concluded that income from foreign branches must be included in the gross receipts in computing the research tax credit. Facts & Procedural History Deere & Company (“Deere”) was in the business of manufacturing, distributing, and financing a full line of agricultural… Continue reading Deere & Company v. Commissioner: Foreign Branch Income is Gross Receipts for Research Tax Credit
What is a “Foreign Country” for Income Tax Purposes?
Our tax laws allow individual taxpayers to exclude income earned in certain foreign countries. This begs the question as to whether a taxpayer working outside of the U.S. is in a foreign country if he is working in an area that is not governed by the equivalent of what we think of as a government. … Continue reading What is a “Foreign Country” for Income Tax Purposes?