International Tax Blog

New IRS Practice Units - FTC Carryback and Carryover & Liquidating Distributions of a Partner’s Interest in a Partnership

Last week the IRS published 2 new practice units related to international tax: FTC Carryback and Carryover Liquidating Distributions of a Partner’s Interest in a Partnership PDF We have added these practice units to our Practice Units By Topic page. Read more →

US Treaty Limitation on Benefits Status Map

We have created a map of the limitation on benefits (“LOB”) status of the 66 countries for which the US has income tax treaties. US treaties with 46 countries have full LOB rules. US treaties with six countries have no LOB rules (Greece, Hungary, Pakistan, Philippines, Poland, and Romania). The former USSR-US Income Tax Treaty, which applies to nine former republics of the USSR, also has no LOB rules (Armenia, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Moldova,... Read more →

AM 2021-002 – Relevance & Check-the-Box Elections

Yesterday the IRS published AM 2021-002. This AM concludes that a foreign eligible entity is classified pursuant to Treas. Reg. §301.7701-3(b)(2) (“the default classification provision”) during the period in which its classification is not relevant. The AM states that this determination is made when the classification of the entity first becomes relevant, but the classification applies during the non-relevant period. The AM also concludes that the 60-month limitation rule does not apply if the election... Read more →

Flow-Thru Symbols: An Up-Side-Down “Funnel” Theme

For my charts, I typically show flow-thru entities as rectangles with small triangles in the lower right corner. I think of the triangle as an up-side-down funnel. The funnel allows the income to flow from the entity upwards to its owner. For entities that are true partnerships, I typically show them as triangles to reflect their flow-thru nature. S corporations are generally flow-thru entities. To continue the funnel theme, I show S corporations as trapezoids,... Read more →

Multiple new situational charts published

We recently added 12 new situational tax charts to AndrewMitchel.com (charts listed in topical order and charts listed in alpha-numeric order). We have over 1200 charts for FREE on our website. The recently published charts include: Rev. Rul. 70-409 (Liquidating Distribution of Shareholders' Notes Was a Distribution of Money) Reg. 1.881-5(h), Example (US VI Corp Was Not Less Than 25% Owned By Foreign Persons) Reg. 1.904-4(f)(4)(i), Example 1 (Determination of Foreign Branches and Foreign Branch... Read more →

New IRS Practice Unit: 965 Transition Tax

Yesterday the IRS published a new practice unit titled “IRC 965 Transition Tax Overview.” This practice unit discusses the section 965 transition tax that was enacted as part of TCJA. Section 965 deals with the treatment of deferred foreign income upon the transition to the participation exemption system of taxation. You can find links to this practice unit on our Practice Units By Topic page. Read more →

Section 911 Housing Cost Amounts Updated for 2021

Last week the IRS published Notice 2021-18 which provides adjustments to the limitation on housing expenses for specific locations in 2021. 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 2021 is $108,700. The Housing Cost Amount is generally defined as an amount equal to the excess of (A) the “Housing Expenses” of an... Read more →

Famous Tax Quotes - Death May Escape the Woes of Life . . .

Continuing our series on Famous Tax Quotes (quotes from court opinions and rulings with language that is colorful or that concisely states an important tax principle) today's tax quote is from a case that held an FBAR penalty survived the death of the party on whom the penalty was imposed: Death may be an avenue of escape from many of the woes of life, but it is no escape from taxes. U.S. v. Wolin, 126... Read more →

2020 Sets New Record For Published Expatriates

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 2020. The number of published expatriates for the fourth quarter was 660, bringing the total number of published expatriates in 2020 to 6,707. The number of expatriates for 2020 is a 237% increase from 2019. For our prior coverage of expatriation, see all posts tagged Expatriation. Below are two... Read more →

A Brief History of U.S. Tax Expatriation Rules

The first tax expatriation rules were enacted in 1966. The rules were created because Congress instituted a flat 30% tax on U.S.-sourced investment income for nonresident alien individuals. At the time, the top graduated rate for individuals was 70%. Congress was concerned that high income individuals would move abroad and renounce their U.S. citizenship so that they could be taxed at a flat 30% rate on their U.S. investment income. The special expatriation rules required... Read more →