Global Assets, U.S. Persons: Cross-Border Tax Planning Mandatory

In her recent Forbes article “Foreign Trusts – How Structure Can Prevent a Million-Dollar Penalty,” Priya Royal emphasizes a core maxim of cross-border tax planning: whenever U.S. persons are part of the “clan,” heightened vigilance is required. The same principle holds true when U.S. situs assets are involved in foreign families or their structures. Global … Continue reading Global Assets, U.S. Persons: Cross-Border Tax Planning Mandatory →

Corporate ‘Loans’: The Debt v. Equity IRS Challenge And Tax Nightmares

Lenders who advance cash to corporations often do so with a clear expectation: the company will repay the principal and will pay interest, and the borrower will report interest income. Yet for U.S. taxpayers the moment of truth comes much later, sometimes years after the money has left the bank—when the IRS, or a court, … Continue reading Corporate ‘Loans’: The Debt v. Equity IRS Challenge And Tax Nightmares →

Another Breaking! Farhy Overruled – A Big Loss for Overseas Americans

I have written earlier on the case of Farhy v. Commissioner. There the Tax Court held that the IRS does not have the authority to assess and collect penalties asserted under Internal Revenue Code Section 6038(b). In the Farhy case, the assessed penalties were imposed for failure to file Form 5471, the IRS form required … Continue reading Another Breaking! Farhy Overruled – A Big Loss for Overseas Americans →

Taxpayer Wins Again on 5471 Penalty – IRS Cannot Assess

In a holding by the US Tax Court on April 8, 2024, the case of Raju J. Mukhi v. Commissioner of Internal Revenue brought into sharp focus the principle of stare decisis and its implications for tax law. The Tax Court rejected the IRS’ assessment of penalties under Section 6038(b), for failure to file Form … Continue reading Taxpayer Wins Again on 5471 Penalty – IRS Cannot Assess →

“Qualified Dividend Income”: How do the Rules Apply to “Controlled Foreign Corporations?” (Part II)

As will be recalled from the previous blog posting discussing the basics of so-called "Controlled Foreign Corporations" (CFC), a United States shareholder of a CFC can possibly be treated as having received “dividend” income at various times. These are when the US shareholder has (i) current income inclusions from the CFC under the anti-deferral regime (Subpart F … Continue reading “Qualified Dividend Income”: How do the Rules Apply to “Controlled Foreign Corporations?” (Part II) →

“Qualified Dividend Income”: How do the Rules Apply to “Controlled Foreign Corporations?” (Part I)

Today’s post continues to explore the interplay between foreign corporations and the US shareholder’s ability for lower tax rates available only for "qualified dividends". It's a complicated topic. Not all dividends are treated the same and the nuances can make a big difference to the taxpayer’s ultimate investment return. As detailed in my earlier blog … Continue reading “Qualified Dividend Income”: How do the Rules Apply to “Controlled Foreign Corporations?” (Part I) →

Dividends Paid by Foreign Corporations – Are they “Qualified” & Eligible for Capital Gain Rates?

In IRS Notice 2024-11, the Internal Revenue Service (IRS) updated the list of treaties that can provide a foreign corporation with the special status of being a “qualified foreign corporation” (QFC). The list was updated to include the treaty with Chile, which entered into force on December 19, 2023, and to remove the treaty with … Continue reading Dividends Paid by Foreign Corporations – Are they “Qualified” & Eligible for Capital Gain Rates? →

Should You File a Protective Refund Claim for the Transition Tax While Waiting for the US Supreme Court? Moore Might Mean More!

Part I of my blog post set out the background and discussed the debate over Internal Revenue Code Section 965 “transition tax” or “mandatory repatriation tax” enacted in 2017. The Supreme Court recently decided to review the 9th Circuit case of Moore v. United States bringing this controversial tax back into the spotlight. The Court … Continue reading Should You File a Protective Refund Claim for the Transition Tax While Waiting for the US Supreme Court? Moore Might Mean More! →

Moore Might Mean More! US Supreme Court Review of Moore & Section 965 Transition Tax

In recent years, one of the most hotly debated tax issues in the United States has been the imposition by Internal Revenue Code Section 965 of the “transition tax” or “mandatory repatriation tax”, a provision of the Tax Cuts and Jobs Act (TCJA) enacted in 2017. The Supreme Court's recent decision to review the 9th … Continue reading Moore Might Mean More! US Supreme Court Review of Moore & Section 965 Transition Tax →

Big Win for Taxpayers with Foreign Assets: IRS Lacks Authority to Assess & Collect Penalties for Failure to File Foreign Information Returns

The Internal Revenue Service (IRS) was sucker-punched by the Tax Court on April 3, 2023 in the case of Farhy v. Commissioner, 160 T.C. No. 6 (2023). In that case, the Tax Court held that the IRS does not have the authority to assess and collect penalties asserted under Internal Revenue Code Section 6038(b), in the … Continue reading Big Win for Taxpayers with Foreign Assets: IRS Lacks Authority to Assess & Collect Penalties for Failure to File Foreign Information Returns →