May 3, 2018 - Haoshen Zhong

Section 965 and Fiscal Year Foreign Corporations, Part II

Fiscal year corporations and section 965

Today’s post is a followup to the (last post), about a US citizen who owns shares of a fiscal year foreign corporation that is subject to the new deemed repatriation rule of section 965. Here is the setup:

I am a US citizen reporting on a calendar year. I have a foreign corporation with a fiscal year ending June 30. When am I subject to the repatriation tax? What is the rate of tax?

In the last post, I wrote that this corporation may be subject to section 898, which forces certain CFCs to conform to its shareholder(s) tax year.... continue reading

April 27, 2018 - Phil Hodgen

Section 962 Elections, GILTI, and “As If” in the Internal Revenue Code

Yet Another “As If”

And the preparation for next Friday’s Section 962 workshop dragged my attention across a sleepy backwater of the Internal Code: Section 951A(f)(1)(A).

Well, not so sleepy, actually. Section 951A is the gnarled source of that gratuitously complex eruption of overly excessive legislative overkill dubbed GILTI by its authors.1

There we find a newly-minted (circa December, 2017) instance of “as if”, this time disguised by using the magic words “in the same manner”.

Everything works out in the end. We can figure out what the law is (more or less). Still, I wish the writers (let’s be fair to writers, like Sparky Anderson)2 had not introduced yet another fiction into the Code.... continue reading

Friday Edition
April 24, 2018 - Debra Rudd

Do Non-Green Card Years Count Toward the 8-Year Long-Term Resident Test?

This week’s question addresses a common situation:

Do years that someone spends in the US on a non-green card visa count towards the long-term resident test?

For purposes of answering this question, I will use the following example:

A taxpayer lives in the US on an H1-B visa for 7 years, then gets his green card. He stays in the US on the green card 2 more years, then moves back to his home country. The year he leaves the US, he turns in his green card with Form I-407.

The question I will answer is: Did this person become a long-term resident, and is he an expatriate when he turns in his green card?... continue reading

April 19, 2018 - Haoshen Zhong

Section 965 and Fiscal Year Foreign Corporations

*Please see the follow-up to this post here.

Fiscal year corporations and section 965

Here is one question that we saw rather often:

I am a US citizen reporting on a calendar year. I have a fiscal year corporation. When am I subject to the repatriation tax? What is the rate of tax?

This post explains why you might not have a fiscal year corporation under tax law, why a US shareholder of a fiscal year corporation (assuming it is one) takes into account income in 2018, and how the participation exemption works for shareholders of fiscal year corporations.

Background: deemed repatriation under section 965

A quick introduction to section 965: In December of 2017, Congress passed laws that changed the US taxation of foreign income significantly.... continue reading

April 13, 2018 - Phil Hodgen

June 15 Payment Dates for Section 965

Sometimes you need to confirm situation normal. This is one of those times. Thanks to correspondent BZ for triggering the discussion of this topic.

Here is the conclusion up front, in case you want to go outside and have fun:

Americans abroad with tax caused by Section 965 (you know who you are) can pay that tax over eight years. The first installment is due June 15 — the regular tax payment due date.

That seems unremarkable.

Americans abroad have a June 15 filing deadline for their income tax returns, and can pay their tax due by that date without incurring late payment penalties.... continue reading

Friday Edition