International Tax Blog

Section 911 Housing Cost Amounts Updated for 2019

Last week the IRS published Notice 2019-24 which provides adjustments to the limitation on housing expenses for specific locations in 2019. Code §911(a) allows a qualified individual to elect to exclude from gross income an “Exclusion Amount” related to foreign earned income and a “Housing Cost Amount.” The Exclusion Amount for 2019 is $105,900. The Housing Cost Amount is generally defined as an amount equal to the excess of (A) the “Housing Expenses” of an... Read more →

Code §911 Foreign Earned Income Exclusion - Adverse Conditions for 2018

Last week the IRS published Revenue Procedure 2019-15, which announced that Democratic Republic of the Congo, Cuba, Iraq, and Nicaragua are the countries for 2018 where it was determined that war, civil unrest, or similar adverse conditions precluded the normal conduct of business for purposes of Code § 911. The effective date for Democratic Republic of the Congo was December 14, 2018, the effective date for Cuba was January 4, 2018, the effective date for... Read more →

New IRS Practice Units published in March

Last week the IRS released 3 new practice units titled: Competent Authority Revenue Procedure 2015-40 Guidance: Foreign-Initiated Adjustment(s) (03-21-2019) Introduction to Traditional Automatic Exchange of Information (03-15-2019) Competent Authority Process Under a MAP Article of a U.S. Income Tax Treaty (03-08-2019) We updated our IRS Practice Units By Topic page to add these new practice units. Read more →

2018 4th Quarter Published Expatriates - A total of 685

Today the Treasury Department published the names of individuals who renounced their U.S. citizenship or terminated their long-term U.S. residency (“expatriated”) during the fourth quarter of 2018. The number of published expatriates for the fourth quarter was 685, bringing the total number of published expatriates in 2018 to 3,981. The number of expatriates for 2018 is a 22% decrease from 2017. For our prior coverage of expatriation, see all posts tagged Expatriation. Read more →

GILTI Deduction Allowed With 962 Election (Proposed Regulations)

The IRS has issued proposed regulations on the GILTI deduction under Code §250. The proposed regulations indicate that a GILTI deduction will be available for an individual who makes a Code §962 election to be taxed at corporate rates. The preamble to the proposed regulations provides in part: Congress enacted section 962 to ensure that individuals’ tax burdens with respect to undistributed foreign earnings of their CFCs “will be no heavier than they would have... Read more →

Eaton Corp. v. Commr., 152 T.C. No. 2 (2019)

Earlier this week the Tax Court concluded that the earnings and profits (E&P) of certain upper-tier CFCs was increased by the amount of Subpart F Income inclusions and Code §956 inclusions (Code §951(a) inclusions) that flowed up from lower-tier CFCs through a U.S. partnership. Below is a chart of the entity structure in the Eaton case. Read more →

New IRS Practice Unit: Creation of a Permanent Establishment (PE) through the Activities of a Dependent Agent in the United States

Yesterday the IRS released a new practice unit titled: Creation of a Permanent Establishment (PE) through the Activities of a Dependent Agent in the United States. We updated our IRS Practice Units By Topic page to add this new practice unit. Read more →

Rental of Real Estate to Yourself

A taxpayer cannot rent property to him or herself. This is similar to the concept that a taxpayer cannot pay themselves a salary. For example, if a taxpayer has a sole proprietorship and he or she reports the income and expenses of that business on Schedule C of Form 1040, the taxpayer is not able to deduct salary expense on the Schedule C for “wages” paid to him or herself. This makes sense because a... Read more →

Form 5472 Failure to File Penalty Increased to $25,000

Back in 2015 we had blogged about “The Escalation of Offshore Penalties Over the Last 20 Years.” This post explained: “Over the past twenty years, the U.S. has significantly increased the penalties associated with failing to report certain foreign-related transactions, and it has created new filing requirements that have their own associated penalties.” However, the 2015 post had focused on “outbound” information reporting (U.S. persons with foreign activities), such as the FBAR and Forms 3520,... Read more →

The “Certification” on Form W-8BEN For Royalties

If you are an individual who is not a U.S. person (i.e., not a U.S. tax resident or a U.S. citizen) and you receive royalty income from a U.S. payor, the U.S. payor may ask you to fill out Form W-8BEN. If the U.S. payor does not receive the W-8BEN from you, they may be required to withhold a 30% U.S. tax on the gross payments to you. At the bottom of Form W-8BEN, just... Read more →