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Don’t let your foreign sub invest in US property

…that is, unless you don’t mind picking up US taxable income that may otherwise be deferred. If you have a Controlled Foreign Corporation (CFC), then you may be benefiting from some income deferral.  Generally the income earned by a CFC is not taxable in the US until it is paid to the US owner as…

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New regulations aim at corporate related party debt

The IRS may soon have another tool in their belt for attacking corporations capitalized with debt rather than equity.  The Treasury has issued proposed Regulations related to Code Section 385.  This code section was left with a serious ambiguity problem.  It was designed to provide the IRS with the authority to re-characterize debt as equity…

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What’s the deal with Transfer Pricing?

I’m writing this topic from the standpoint of a US taxpayer with international operations.  What that looks like for many of my clients, is a US business that has a foreign subsidiary, where software development or remote customer support is provided.  I actually don’t have any clients that have done this for the purpose of…

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Foreign Base Company Sales – what you need to know

If you operate a foreign company, you may have designated it as a Controlled Foreign Corporation (CFC) in your tax returns.  The CFC designation comes with the potential for US tax deferral because the the general rule is that you are not subject to US tax on the CFC income until your receive a dividend.…

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US filings for foreign operations must be substantially complete

The penalty for filing the Form 5471 late, substantially incomplete, or not at all can start at $10K! The Form 5471 is a federal tax filing for a foreign controlled corporation of a US taxpayer.  The IRS is serious about noncompliance when it comes to filings related to foreign activity.  Back in November, 2015 the…

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