International Tax Blog

5 New Tax Charts Published

Today we published 5 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. 2008-39 (Upper-Tier Partnership Sec. 212 Expenses Must be Separately Stated) Reg. 1.267(a)-3(b)(4), Example 1 (Interest Expense of Accrual Taxpayer Not Deductible Until Paid) Prop. Reg. 1.864-6(c)(3)(i), Example 1 (NRA With a US Tax Home Selling Foreign-Produced Inventory... Read more →

Free Flowchart - Section 894(c): Hybrid & Reverse Hybrid Entities

Today we published an updated version of our Section 894(c): Hybrid & Reverse Hybrid Entities flowchart on our sister site Tax-Charts.com. This free chart guides you through the classification of an entity as a hybrid entity, a reverse hybrid entity, or not a hybrid entity. Tax-Charts.com now has 16 free flowcharts (and 27 flowcharts for sale). Read more →

New IRS Practice Unit: Flow-Through Entities Effects on FTC

Yesterday the IRS published a new practice unit titled “Flow-Through Entities Effects on FTC.” This practice unit discusses how flow-through entities affect an individual’s foreign tax credit. We have added this practice unit to our Practice Units By Topic page. Read more →

Two New (& One Updated) IRS Practice Units

Yesterday the IRS published some new practice units and updated an existing practice unit. The new units included: FEIE - Disallowance of FTCs for Foreign Taxes on Excluded Income (2020) PTI (now PTEP) Exchange Gain or Loss (2020) The updated practice unit was: Official versus Free Market Exchange Rate (2020) We have added these practice units to our Practice Units By Topic page. (The IRS also yesterday published a practice unit on 481(a) Adjustments for... Read more →

2020 First Quarter Published Expatriates –Highest Quarterly Number 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 first quarter of 2020. The number of published expatriates for the quarter was 2,909, which is the highest quarterly number ever. The only previous quarter to come close to this amount was the fourth quarter of 2016, for which there were 2,365 published expatriates. The two quarters preceding the current quarter (the... Read more →

Three New IRS Practice Units

Yesterday the IRS published three new practice units: Substantiation Requirements for Claiming FTCs Foreign Currency Translation for FTCs Installment Method for Installment Sales We have added these practice units to our Practice Units By Topic page. Read more →

New IRS Practice Unit On The Statute Of Limitations

Yesterday the IRS published a new practice unit titled “Overview of Statute of Limitations on the Assessment of Tax.” This practice unit discusses the time limits under which the IRS can no longer assess additional tax, with a focus on international. We have added this practice unit to our Practice Units By Topic page. Read more →

New IRS Practice Unit for “Adjustments for Overwithholding on Form 1042”

Yesterday the IRS published a new practice unit titled “Adjustments for Overwithholding on Form 1042.” This practice unit discusses adjustments for overwithholding of tax done on payments of U.S. source income to foreign persons on Forms 1042 tax returns and Forms 1042-S information returns. As discussed in the practice unit, how corrections to overwithholding are made depends on the timing of when the overwithholding is discovered. Three time periods are discussed: Before last deposits for... Read more →

Rev. Proc. 2020-17 - Exemption From Filing Forms 3520 and 3520-A for Applicable Tax-Favored Foreign Trusts

Yesterday the IRS published Rev. Proc. 2020-17. This revenue procedure provides an exemption from filing Forms 3520 and 3520-A for an “eligible individual’s” transactions with, or ownership of, an “applicable tax-favored foreign trust” (“ATFFT”). An eligible individual generally means an individual who is a U.S. citizen or resident and who is compliant with all requirements for filing U.S. federal income tax returns and has reported as income (to the extent required) any contributions to, earnings... Read more →

Section 911 Housing Cost Amounts Updated for 2020

Last week the IRS published Notice 2020-13 which provides adjustments to the limitation on housing expenses for specific locations in 2020. 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 2020 is $107,600. The Housing Cost Amount is generally defined as an amount equal to the excess of (A) the “Housing Expenses” of an... Read more →

11 New Tax Charts

We recently added 11 new charts to andrewmitchel.com (listed in topical order and listed in alpha-numeric order). We now have more than 1,200 charts available. The recently added charts include: Reg. 1.960-2(b)(5), Example (Deemed Paid Foreign Income Taxes: Subpart F Income Inclusion) Reg. 1.960-2(c)(7)(i), Example 1 (Deemed Paid Foreign Income Taxes: GILTI Inclusion) Reg. 1.960-2(c)(7)(ii), Example 2 (Deemed Paid Foreign Income Taxes: GILTI Inclusion, CFC Owned Thru P'ship) Reg. 1.960-3(e)(1), Example 1 (Foreign Income Taxes... Read more →

2019 Published Expatriates - Lowest Level in Six Years

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 2019. The number of published expatriates for the fourth quarter was 261, bringing the total number of published expatriates in 2019 to 2,072. The number of expatriates for 2019 was the lowest it has been for the past 6 years. The peak of expatriations was in 2016, with 5,411... Read more →

New IRS Practice Unit – FDAP Statistical Sampling in the Audit of a U.S. Withholding Agent

The IRS has published a new practice unit that deals with FDAP statistical sampling in audits of U.S. withholding agents. This practice unit would typically apply to the audit of a U.S. financial institution. To see all IRS Practice Units, click here. Read more →

Video - Downward Attribution Form 5471

Today we uploaded a video discussing downward attribution and filing Form 5471. The video is shown below. Read more →

Form 8993 With Graphic of Formulas

Below is an image of Form 8993 with some sample numbers. The image shows the formulas used to calculate FDII, with color coding to show where the numbers on the form go in the formulas. Click here for a PDF version of the graphic. Read more →

Famous Tax Quotes - Perhaps Congress Just Stubbed Its Toe

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 where the 11th Circuit was applying the plain meaning rule in interpreting Code §1234A with respect to Code §1231 property: Perhaps * * * Congress just stubbed its toe between the hearing room and the House and Senate floors. Even so, it’s not our place... Read more →

Video - Sec. 1446(f) Withholding on Sales of Partnerships Engaged in US Business

Today we uploaded a video discussing the new rules under Sec. 1446(f), regarding withholding on sales of partnerships engaged in US business. The video is shown below. Read more →

Famous Tax Quotes - Penalties For Hardheaded Persistence

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: [W]e will impose a penalty of $1,000 on [the petitioner in Tax Court] for continuing to advance his frivolous arguments. We also warn petitioner that if he does not abandon his misguided and rejected positions-e.g., that he is not subject to tax or required to... Read more →

Famous Tax Quotes - Like white asparagus or a blood orange

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: Like white asparagus or a blood orange, this first issue is not ordinary fare but an odd variation, caused by the interplay of ordinary factors with Puerto Rico tax status. Bergersen v. Commr., 109 F.3d 56 (1st Cir. 1997). Read more →

2020 Inflation Adjustments for Individuals in the International Tax Arena

Last week the IRS published Revenue Procedure 2019-44, setting forth inflation adjusted items for 2020. In the international arena, some of the important inflation adjustments include: $171,000 --- Code § 877(a)(2)(A) --- The average annual net income tax that must be imposed for the five taxable years ending before the date of the loss of United States citizenship (or cessation of long-term permanent residency) for an individual to be considered a “covered expatriate” under Code... Read more →

2019 3rd Quarter Published Expatriates - Lowest Since 4th Quarter 2012

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 third quarter of 2019. The number of published expatriates for the quarter was 183 which is the lowest amount of published expatriates in any quarter since the 4th quarter of 2012 where only 45 names were listed. See the chart below for the quarterly expatriates from 2008 to the second quarter of... Read more →

Famous Tax Quotes - The Regulations Barely Rocked The Statutory Boat

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: [W]e note that the regulations track the text of §956(d) nearly verbatim. The almost word-for-word match keeps the IRS’s terse explanation in line with the general principle that the more a regulation departs from a statute, the more an agency must explain itself. * *... Read more →

8 New Charts Of Examples Regarding Classification of Cloud Transactions & Computer Programs

On August 24, 2019, the Treasury Department and the IRS issued proposed regulations regarding the classification of cloud transactions for purposes of the international provisions of the Code. The proposed regulations also modify the rules for classifying transactions involving computer programs, including by applying the rules to transfers of digital content. We have created charts of certain examples included in the proposed regulations. View these charts and over a thousand other free charts at andrewmitchel.com... Read more →

2019 2nd Quarter 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 second quarter of 2019. The number of published expatriates for the quarter was 609. See the chart below for the quarterly expatriates from 2008 to the second quarter of 2019. For a discussion of how the IRS compiles the data, see this post. For our prior coverage of expatriation, see all posts... Read more →

India-U.S. Income Tax Treaty – Article 12, Fees For Included Services

Sometimes U.S. companies perform services in the U.S. for customers located in India and are surprised when the Indian customer withholds Indian taxes from the payment for those services. Most U.S. income tax treaties would not allow foreign taxes to be imposed on services performed in the U.S., where the U.S service-provider has no activity or permanent establishment in the foreign country. However, the India-U.S. Income Tax Treaty (the “Treaty”) is not a typical U.S.... Read more →