Mitigation of International Double Taxation

Description

United States taxation rules of international income underwent a radical shift due to the 2017 Tax Cuts and Jobs Act. The United States moved from a "tax me now or tax me later" treatment of international income to a "tax me now or tax me never" system. Certain foreign derived income is now subject to a territorial system of taxation while other income remains subject to the general rule of worldwide taxation at potentially favorable tax rates. There has also been in a significant change in the United States treatment of foreign taxes imposed on the income subject to the new territorial regime and the rules for claiming a foreign tax credit or deduction.

This course will examine the situations in which double taxation arises, how the United States taxes foreign source income, the rules for claiming a foreign tax credit and the opportunities to reduce the worldwide tax burden on foreign source income. 

Highlights

• How foreign source income of a United States taxpayer is taxed by the United States focusing on the structure created by the 2017 Tax Cuts and Jobs Act, and comparing it to prior law
• The direct, indirect and “in lieu of” foreign tax credit
• The foreign tax credit limitation and basket rules
• § 911 Foreign Earned Income Exclusion

Objectives

• Identify which foreign taxes are eligible for the foreign tax credit.
• Determine who is eligible to claim a foreign tax credit.
• Understand what constitutes Global Intangible Low Taxed Income ("GILTI"), Foreign Derived Intangible income ("FDII") and the determination of tax free foreign source income.
• Distinguish between and properly calculate the direct, indirect and "in lieu of" credit.
• Recognize the purpose and application of the foreign tax credit limitation and basket rules.
• Calculate the foreign earned income exclusion.
• Identify opportunities to reduce the United States rate of taxation on foreign income and to maximize the creditability of foreign taxes.

Designed For

CPA, attorneys and tax practitioners.