International Tax Blog

Famous Tax Quotes - Almost Indistinguishable Lines

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: The line of separation between trusts and associations is often so vague as to make them almost indistinguishable. Estate of Scofield v. Commr., 266 F.2d 154 (6th Cir. 1959). Read more →

Withdrawal of Prior Blog Post Regarding Australian Superannuation Funds

Last week we posted about the taxation of Australian superannuation funds potentially being treated as social security under the Australia-U.S Income Tax Treaty. The post explicitly assumed, for argument’s sake, that “superannuation guarantee” was considered part of the social security system of Australia. The post also implicitly assumed that superannuation guarantee was paid into superannuation funds by employers, and not by the Government of Australia. Under these assumptions, the post concluded that the treaty would... Read more →

5 New Tax Charts

We have added 5 new situational charts to andrewmitchel.com (listed in topical order). View these charts and hundreds of other free charts at andrewmitchel.com (listed in alpha-numeric order). Rev. Rul. 73-157, Situation 1 (Installment Sale Method Not Available When Sold Thru Son As Conduit) Rev. Rul. 73-157, Situation 2 (Installment Sale Method Not Available When Sold Thru Corp As Conduit) Reg. 1.987-2(c)(10), Example 4 (Section 987: Sale of Property by a Section 987 QBU) Reg.... Read more →

Anticlimactic Discoveries

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: At the heart of the labyrinth, where one might expect to find, if not a Minotaur, then at least an old movie lion, we find high-basis, low-value assets (said to have spawned startling losses) and some B-grade films. Santa Monica Pictures, LLC et al. v.... Read more →

5 New Tax Charts

Today we added 5 new situational charts to andrewmitchel.com (listed in topical order). View these charts and hundreds of other free charts at andrewmitchel.com (listed in alpha-numeric order). Grecian Magnesite Mining (Foreign Partner's Gain on Sale of U.S. Partnership Interest Not Effectively Connected Income) Rev. Rul. 2017-9, Situation 1 (351 Exchange (South) Followed By Spin-Off (North)) Rev. Rul. 2017-9, Situation 2 (Gain Recognized On South Transaction Due Boot Received Not Being Distributed) Reg. 1.987-2(c)(10), Ex.... Read more →

Belize IBC Selling Through Amazon FBA

Is it a good idea to set up a Belize IBC to sell products to U.S. customers thru Amazon FBA? Perhaps not. Let’s assume the situation is as follows: An individual (let’s call her Jane) resides in a foreign country --- say, for example, Australia. Jane is not a U.S. citizen or a U.S. tax resident. Jane decides she wants to sell products to U.S. customers where the products are manufactured in China and sold... Read more →

2017 Second Quarter Published Expatriates – Second Highest Ever

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 second quarter of 2017. The number of published expatriates for the quarter was 1,759, which is the second highest quarterly number ever (second only to the fourth quarter of 2016 which had 2,365 published expatriates). The number of published expatriates for the first two quarters of 2017 has been 3,072 (1,313 +... Read more →

New Carousel of Tax Charts

Today we added a new way to view the charts on AndrewMitchel.com. We call it the “Carousel of Tax Charts.” We now have a total of 886 situational tax charts on AndrewMitchel.com, and the Carousel allows you to scroll through the charts much more easily. You are also able to filter the charts by topic so that you can scroll through only the relevant charts you want to research. Below is a short video showing... Read more →

Tax Court Declines to Follow Rev. Rul. 91-32

Last week, the Tax Court released an important opinion in Grecian Magnesite Mining, Industrial & Shipping Co., SA v. Commissioner, 149 T.C. No. 3, where the court declined to follow Rev. Rul. 91-32. For more than 25 years the IRS has maintained that gain on a foreign partner’s disposition of an interest in a partnership that conducts business in the U.S. is subject to U.S. tax. To arrive at this conclusion, the IRS applied the... Read more →

An Unsubstantiated Presumption

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: The tax collector's presumption of correctness has a herculean muscularity of Goliathlike reach, but we strike an Achilles' heel when we find no muscles, no tendons, no ligaments of fact. LaBow v. Commr, 763 F.2d 125 (2d Cir. 1985) Read more →

5 New Tax Charts

Today we added 5 new situational charts to andrewmitchel.com (listed in topical order). View these charts and hundreds of other free charts at andrewmitchel.com (listed in alpha-numeric order). Reg. 1.987-2(c)(10), Example 1 (Section 987: Disregarded Interbranch Transaction) Reg. 1.6038A-2(b)(9), Example 1 (5472 Reporting for U.S. Disregarded Entity) Reg. 1.6038A-2(b)(9), Example 2 (5472 Reporting for Transactions Between U.S. Disregarded Entities) PLR 9612017 (Gain on Sale of S Corporations Was Foreign Source Income) PLR 200620016 (Breach of... Read more →

Failures to Adjust for Inflation

If Congress pursues tax reform this year, it should consider allowing inflation adjustments for the items discussed below. Each year, the IRS publishes inflation adjustments that modify the tax law as originally enacted. We regularly post about the inflation adjustments in the international tax arena. However, there are some significant values in the international tax area that are not adjusted for inflation. In one case, the value has remained unchanged for over eighty years. FBAR... Read more →

U.S. Government Continues to Pursue Taxpayers Committing Tax Fraud

As we have reported in past years the U.S. government actively pursues taxpayers that are committing tax fraud. The Justice Department publicizes its successes in its press releases. The press releases continue to demonstrate an impressive list of tax-related convictions, guilty pleas, injunctions, summonses, and other actions against taxpayers (and tax preparers). Many of the tax fraud schemes include offshore activities. See, for instance: Texas Woman Pleads Guilty to Using Offshore Accounts in Panama to... Read more →

Careful / Close / Extra / Heightened / Rigid / Special / Strict Scrutiny For Related Party Transactions

Courts typically scrutinize transactions between related parties. They will often use different descriptions for the type of scrutiny that they are applying. For example, some courts will say that they are applying “careful” scrutiny, while others will indicate “close” or “extra” scrutiny. Other descriptions include: “heightened,” “rigid,” “special,” or “strict” scrutiny. These terms seem to be used interchangeably. Below are excerpts from some tax cases using these terms. Beretta v. Commr., T.C. Memo 1997-570: Courts... Read more →

5 New Tax Charts

Today we added 5 new situational charts to andrewmitchel.com (listed in topical order). View these charts and hundreds of other free charts at andrewmitchel.com (listed in alpha-numeric order). Inverworld (Cayman Island Company Was Engaged in a U.S. Trade or Business and Had U.S. ECI) Rev. Rul. 66-86 (Section 2036 Does Not Apply to Life Interest In Trust For Inherited Usufruct) Reg. 1.957-1(c), Example 8 (>50% Ownership of Value & At Least 10% of Vote Makes... Read more →

5 New Tax Charts

Today we added 5 new situational charts to andrewmitchel.com dealing with Section 987 Branch Transactions. Reg. 1.987-1(b)(7), Example 1 (Not a Section 987 QBU: Disregarded Entity Holding Stock & Servicing a Debt) Reg. 1.987-1(b)(7), Example 2 (Section 987 QBU: Disregarded Entities with Active Businesses) Reg. 1.987-1(b)(7), Example 3 (Section 987 QBU: Election to Treat Separate QBUs as One QBU) Reg. 1.987-1(b)(7), Example 4 (Section 987 QBU: Aggregate Partnerships) Reg. 1.987-1(b)(7), Example 5 (Section 987 QBU:... Read more →

2017 First Quarter Published Expatriates – A Total of 1,313

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 first quarter of 2017. The number of published expatriates for the quarter was 1,313. The data released today follows four consecutive years where new records were set for the number of expatriates. In 2013, there were 2,999 published expatriates, and last year there were 5,411 published expatriates. For a discussion of how... Read more →

Updated - IRS Practice Units by Topic

Recently, the IRS published 11 new International Practice Units (“IPUs”) on its website. We have updated our resource page that categorizes the IPUs by topic. The new IPUs include: IRC 367(d) Transactions in Conjunction with Cost Sharing Arrangements (CSA) Hedge Fund Basics Summary of Foreign and Domestic Loss Impacts on the Foreign Tax Credit How to Assess Penalties for Failure to File Form 8886 Disclosing IRC 988 losses Sourcing of Exchange Gains or Losses in... Read more →

Blind Guesses Are Not Good Faith Estimates

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: Although the nature of an estimate is such that the estimate does not guarantee that the true value of the thing being estimated will equal that predicted in the estimate, the estimate does carry an implied assertion that its author knows facts that justify the... Read more →

Lower Court Overruling a Higher Court

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 Vukasovich v. Commr., 790 F.2d 1409 (9th Cir. 1986), where the Ninth Circuit Court of Appeals held that a prior Supreme Court decision (Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926)) had been implicitly overruled: [T]he courts of appeal should decide cases according to... Read more →

Section 911 Housing Cost Amounts Updated for 2017

Last week the IRS published Notice 2017-21 which provides adjustments to the limitation on housing expenses for specific locations in 2017. 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 2017 is $102,100. The Housing Cost Amount is generally defined as an amount equal to the excess of (A) the “Housing Expenses” of an... Read more →

New Form 5472 Filing Requirements for Foreign-Owned U.S. Disregarded Entities (“FOUSDEs”)

On December 13, 2016, the IRS published new regulations that treat foreign-owned U.S. disregarded entities (“FOUSDEs”) as domestic corporations for purposes of filing Form 5472 (and for certain record maintenance requirements). This new rule applies to taxable years beginning after December 31, 2016. Form 5472 is required to be filed under Code §6038A and new Treas. Reg. §1.6038A-1(c)(1) provides in part: A domestic business entity that is wholly owned by one foreign person and that... Read more →

Being Engaged in U.S. Business Through Independent Agents

The Tax Court in Inverworld v. Commr., 71 TCM 3231 (1996), concisely stated the U.S. tax rules for foreign corporations that have activities in the U.S.: Foreign corporations operating in the United States are subject to two U.S. taxation regimes. Under the first regime, a foreign corporation engaged in trade or business within the United States during the taxable year is taxable on its income which is effectively connected with the conduct of such trade... Read more →

Caligula & Taxes

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: "Caligula posted the tax laws in such fine print and so high that his subjects could not read them. Suetonius, The Twelve Caesars, bk. 4, para. 41 (Robert Graves, trans., 1957)." Summa Holdings, Inc. v. Commr., No. 16-1712 (6th Cir. 2017). Read more →

2016 Fourth Quarter Published Expatriates – New Annual Record

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 2016. The number of published expatriates for the quarter was 2,365, bringing the total number of published expatriates in 2016 to 5,411. The total for the year breaks last year’s record number of 4,279 published expatriates. The number of expatriates for 2016 is a 26% increase over 2015 and... Read more →