Yearly Archives: 2019

Now according to Law360, The Internal Revenue Service proposed regulations on October 1, 2019 to provide some relief and restore continuity after a change under the 2017 federal tax overhaul that broadened the scope of offshore subsidiaries treated as controlled foreign corporations.

The proposed regulations are generally intended to ensure that the operation of certain rules is consistent with their application before the Tax Cuts and Jobs Act  repealed Internal Revenue Code Section 958(b)(4) . Before it was removed, the measure had prevented the so-called downward attribution of stock ownership of overseas corporations from foreign parent companies to U.S. affiliates.

Under Section 958(b)(4), a foreign parent company's ownership of an offshore subsidiary wasn't attributed to the parent company's U.S. affiliate. With Section 958(b)(4) gone, however, the offshore subsidiary is treated as a controlled foreign corporation, or CFC, under the U.S. branch.

The Unexpected Switch To a CFC Designation.

 

“Unanticipated increases in costs can be detrimental to normal business operations and can put affected groups at a disadvantage relative to competitors who did not experience such changes,” the IRS said, adding the rules are “designed to maintain continuity of normal business operations.”

In certain cases, the proposed regulations will prevent the unintended disruption in business activity by determining CFC status as if Section 958(b)(4) hadn’t been repealed. For example, the IRS cited foreign-parented groups in the space, ocean and international communications industries that have U.S. subsidiaries.

In the absence of the proposed rules, these corporate groups' foreign subsidiaries could potentially have been designated as CFCs, which would result in all or part of the foreign subsidiaries' earnings,  depending on the industry, being treated as U.S. source income.

“Comments received suggested that such treatment would render companies’ business models untenable,” the IRS said.

Accordingly, The Agency Noted That In Such Cases,

The Determination Of Whether A Foreign Corporation
 Is A CFC Is Made Without Regard

To Downward Attribution From A Foreign Person.

The proposed rules also address Internal Revenue Code Section 267(a)(2) , which covers the timing of deductions on payments between related parties. Following the repeal of Section 958(b)(4), a foreign corporation that wasn’t a CFC under prior law could become one as early as Jan. 1, 2017, even though the TCJA was enacted in December of that year, according to the IRS.

This timing affects companies using an accrual accounting method, which involves reporting income for the year in which it is earned and deducting expenses for the year in which they are incurred.

Accordingly, the proposed rule “removes inconsistent annual treatment of deductions” for certain payments in the year the amounts are accrued in cases in which the payments are owed to related foreign corporations that have no direct or indirect U.S. shareholders.

The IRS also issued a revenue procedure on October 1, 2019, limiting the inquiries required by those in the U.S. to determine whether certain foreign corporations are CFCs. In addition, the agency noted that if unrelated minority U.S. shareholders lack detailed tax information with respect to certain CFCs, they can rely on specified financial statement information instead.

Such information can be used to calculate inclusions under Subpart F and the TCJA’s measure on global intangible low-taxed income, the IRS said.

The revenue procedure will also limit filing requirements of U.S. shareholders who only constructively own stock of the CFC because of downward attribution from another person, according to the agency.

 

Have an International Tax Problem?

 

 Contact the Tax Lawyers at

Marini & Associates, P.A. 

 

 for a FREE Tax Consultation Contact us at:

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).



 

On June 28th 2019, HB 7127 was signed by Florida Governor Ron DeSantis, requiring additional information to be submitted to the Florida Department of Revenue.  

• The additional information must be submitted online at https://floridarevenue.com. 
• A Tax Information Publication (TIP) was issued on August 26, 2019 and sent to taxpayers who may be affected by these new requirements. 

What Additional Required Information Should be Reported?Florida Corporate Income/Franchise Tax Return of Schedule

• Taxpayer’s name and federal employer identification number (FEIN);
• Taxable-year beginning date and end date;
• Federal Taxable Income;
• Florida Apportionment Fraction;
• Election of Filing Basis;
• Florida Net Operating Loss (NOL) carryover to next taxable year;
• Florida Alternative Minimum Tax (AMT) Credit Carryover to next taxable year.  

Federal Corporate Income Tax Return

• Federal net operating loss carryover that was not applied due to the limitation under Section 172(a)(2), Internal Revenue Code (IRC) (80% of taxable income computed without regard to the deductions allowable under Section 172);

  
 Form 8993 - Section 250 Deduction for Foreign-Derived Intangible Income (FDII) and Global Intangible Low-Taxed Income (GILTI)

• Foreign Derived Intangible Income (FDII);
• Amount of Foreign Derived Intangible Income (FDII)- related deduction under Section 250, Internal Revenue Code (IRC);
• Amount of Global Intangible Low-Taxed Income (GILTI) included in the federal taxable income (federal Form 8993, Part IV, Line 8);
• Amount of Global Intangible Low-Taxed Income (GILTI) - related deduction under Section 250, Internal Revenue Code (IRC) (federal Form 8993, Part IV, Line 9).  

• Amount of business interest expense deduction on the federal return, including any carryover (federal Form 8990, Part 1, Section I, Line 2);  
• Amount of disallowed business interest expense carried over from previous taxable year (federal Form 8990, Part 1, Section IV, Line 30);
• Amount of current-year business interest expense not deducted due to the limitation (federal Form 8990, Part 1, Section IV, Line 31).

North American Industry Classification System (NAICS) Code

• NAICS code for business activity generating the greatest amount of gross receipts for the taxpayer.

• Taxpayer’s who fail to provide the required information by the submission date are subject to the greater of either, but not both:

• $1,000;
• 1% of the tax determined to be due.  

• An officer of the taxpayer or a person duly authorized to act on the taxpayer’s behalf must certify that the information submitted is true and correct.  

• The information must be submitted the earlier of days after the extended due date of the state corporate income/franchise tax return or 10 days after the state corporate/franchise tax return is filed.
• Originally, if you have filed your Florida corporate income/franchise tax return or the extended due date for your return is prior to September 3, 2019, your additional required information will be considered timely if submitted by September 3, 2019.
• However, as a result of Hurricane Dorian, the due date has been extended to October 27th for all taxpayers.

 

 Contact the Tax Lawyers at

Marini & Associates, P.A. 

 

 for a FREE Tax Consultation Contact us at:

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).

The Cyprus' government has approved changes to its citizenship-by-investment scheme following pressure from the European Union and the OECD.

Applicants will, in future, have to undergo background checks by a specialist firm, and must already possess a Schengen visa allowing them to travel in the Schengen area for up to 90 days. It’s the largest free travel area in the world. 

A Schengen visa is a short-stay visa that allows a person to travel to any members of the Schengen Area, per stays up to 90 days for tourism or business purposes. The Schengen visa is the most common visa for Europe. It enables its holder to enter, freely travel within, and leave the Schengen zone from any of the Schengen member countries. There are no border controls within the Schengen Zone. 
However, if you are planning to study, work, or live in one of the Schengen countries for more than 90 days, then you must apply for a national visa of that European country and not a Schengen Visa.

Those who have already been rejected by other EU Member States will be excluded from applying for Cypress citizenship.

 

New regulations from the Internal Revenue Service provide relief to some U.S. taxpayers who own stock in certain foreign corporations. Rev. Proc. 2019-40 and the proposed regulations limit the inquiries required by U.S. taxpayers to determine whether certain foreign businesses are controlled foreign corporations.

The Revenue Procedure limits the inquiries required by U.S. persons to determine whether certain foreign corporations are controlled foreign corporations (“CFCs”). The Revenue Procedure also allows certain unrelated minority U.S. shareholders to rely on specified financial statement information to calculate their subpart F and GILTI inclusions and satisfy reporting requirements with respect to certain CFCs if more detailed tax information is not available. It also provides penalty relief to taxpayers in the specified circumstances. 

Finally, the Revenue Procedure announces that the IRS intends to amend the instructions for Form 5471 to reduce the amount of information that certain unrelated minority U.S. shareholders of the CFC are required to provide. It will also limit the filing requirements of U.S. shareholders who only constructively own stock of the CFC solely due to downward attribution from another person.

The proposed regulations provide additional relief to taxpayers affected by the repeal of section 958(b)(4). These regulations also propose modifications to existing regulations that are intended to ensure, in certain appropriate circumstances, that the operation of certain rules is consistent with their application before the repeal of section 958(b)(4). The repeal of section 958(b)(4) was part of the Tax Cuts and Jobs Act.  

Section 958 provided the rules for determining stock ownership of CFCs. These rules included direct, indirect, and constructive ownership. In looking at the constructive ownership rules, Section 318 is applied with certain modifications. Prior to the enactment of the TCJA, Section 958(b)(4) prevented stock owned by a non-US person from being considered to be owned, via attribution, by a US person.

The repeal of Section 958(b)(4) has created a situation in which there’s no longer a limitation on the downward attribution of stock ownership. Instead, under the revised attribution rules, a foreign subsidiary company that shares a foreign parent with a US company is now classified as a CFC. A CFC is defined as a foreign corporation that’s more than 50% owned by vote or value by a US shareholder.

Have an International Tax Problem?

 

 Contact the Tax Lawyers at

Marini & Associates, P.A. 

 

 for a FREE Tax Consultation Contact us at:

www.TaxAid.com or www.OVDPLaw.com

or Toll Free at 888-8TaxAid (888 882-9243).