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 1
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Practical Guide to
U.S. Taxation of
r o d u c e.
International Transactions d o n o t rep
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l 6 a 9-0
Person 2020-0

TWELFTH EDITION
ro d u c e.
d o n o t rep
s e o n ly,
e r s on al u 0 - 0 9 - 06 ROBERT J. MISEY, JR.
P 20 2
MICHAEL S. SCHADEWALD

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ix

Acknowledgments p r o d u ce.
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I would like to acknowledge the assistance of my father and mentor, Robert J.
Misey, Sr., Esq., who provided organizational and, as always, motivational input
with respect to various aspects of this work and my son, Robert J. Misey, III, who
provided thoughtful comments on earlier drafts. I would also like to acknowledge
the professional support and encouragement of my former colleagues at the IRS
r o d u c e.
Chief Counsel (International) in Washington, D.C. o not rep
e o n l y,d
r s o n a l us Robert J.-Misey,
0 9 -0 6
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Contents t reproduce.
l y, d o no
l u s e on
Person
a
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Chapter 20 Page

PART I: BASIC PRINCIPLES

1 Overview of U.S. Taxation of International Transactions .... 1
2 Tax Jurisdiction ................................... 15
r o d u c e.
3 Source-of-Income Rules .............................
d o n o t rep
59

u s e o nly,
e r s o n al 0 -0 9 -06
P
PART II: TAXATION OF FOREIGN ACTIVITIES OF20 2
U.S.
PERSONS
4 The Foreign Tax Credit and the Dividends Received
Deduction ....................................... 99
5 Anti-Deferral Regimes .............................. 171
.
duce and Transactions ..........
6
o n eproTranslation
Foreign Currency
o tr 281
o n d
7ly,Export Benefits ................................... 299
n al us e - 06for Foreign Operations ......................
P e r s o 2 0 - 0 9
20 8 Planning 337

PART III: TAXATION OF U.S. ACTIVITIES OF FOREIGN

PERSONS
9 Withholding on the Income of Foreign Persons in the United
r o d u c e.
n o p
States ...........................................
t re 401
10 o
Foreign Persons Conducting n o
y, d in the United States .
lBusiness 485
n al u s e -06 Operations .....
e rs o 0 -0 9
11 P
Planning for
202
Foreign-Owned United States 549

PART IV: ISSUES COMMON TO OUTBOUND AND

INBOUND ACTIVITIES
12 Transfer Pricing ................................... 579
r o d u c e.
13 Tax Treaties ......................................
o
641
n o t rep
14 s e
Section 367—Outbound, Inbound, and Foreign-to-Foreign o n ly, d
e r s o n al u 0 -0 9 - 6
0763
Transfers of Property ...............................
P 202
15 State Taxation of International Operations ............... 803
16 International Tax Practice and Procedure ............... 821

Index ........................................... 869

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Contents in Detail p r o d u ce.

d o n o t re
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PART I: BASIC PRINCIPLES
Chapter 1: Overview of U.S. Taxation of International Transactions
Basic Principles ........................................ 101
Tax Jurisdiction .................................... 101.01
Source of Income Rules .............................. 101.02
r o d u c e.
Taxation of U.S. Person’s Foreign Activities ................... 102 ot
o n rep
n l y, d
Foreign Tax Credit ..................................
n a l u s eo 102.01
-06
r s o
Dividends Repatriations from Foreign Subsidiaries
P e .........
2 0 -0 9
102.02
Subpart F Inclusions ................................ 20 102.03
Global Intangible Low-Taxed Income .................... 102.04
One-Time Transition Tax on Deferred Foreign Income ...... 102.05
Foreign-Derived Intangible Income Deduction ............ 102.06
Passive Foreign Investment Companies .................. 102.07
d u c e
Foreign Currency Translation . and Transactions ........... 102.08
t
Taxation of Foreign
n o re pro U.S. Activities ................... 103
Person’s
o n l y, do Persons Investing in the United States ............ 103.01
Foreign
s on al use - 0 9 6
-0Persons
P e r 0 2 0 Foreign Doing Business in the United States .......
2Issues Common to Outbound and Inbound Activities ........... 104
103.02

Transfer Pricing .................................... 104.01

Income Tax Treaties ................................ 104.02
Organization of International Provisions in the Internal Revenue
Code ................................................ 105

r o d u c e.
Chapter 2: Tax Jurisdiction
o n o t rep
s e o n ly, d
Jurisdictional Issues ..................................... 201
e
Bases for rs o n al uJurisdiction0........................
Asserting - 0 9 -06 201.01
P 202 .......................
Territorial versus Credit Systems 201.02
Tax Treaties ....................................... 201.03
Overview of U.S. Jurisdictional System ...................... 202
Foreign Activities of U.S. Persons ...................... 202.01
U.S. Activities of Foreign Persons ...................... 202.02
Definition of Resident Alien ............................... 203
r o d u c e.
Green Card Test (Lawful Permanent Residence) ........... 203.01ot
o n rep
n l y, d
Substantial Presence Test ............................
n a l u s eo 203.02
-06
e r s o
First Year of Residency ..............................
0 -0 9
203.03
P
Last Year of Residency ............................... 202 203.04
Filing a Joint Return ................................. 203.05
Foreign-Earned Income Exclusion .......................... 204
Exclusion versus Credit .............................. 204.01
Qualified Individuals ................................ 204.02
u c e .
Computing the Exclusion ............................. 204.03
Housing Cost
no prod Exclusion ....................... 204.04
t reAmount
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p r o d u ce. Paragraph
d o n o t re
o n l y,
Electing the Exclusion ............................... 204.05
Mark-to-Market Exit a
o n l
Taxu seExpatriates 9.....................
for -0 6 205
rs -0
2020U.S. System .............. 206
Pe Regarding the Current
A Policy Note
Appendix ............................................. 207

Chapter 3: Source-of-Income Rules

Importance of Source Rules ............................... 301
U.S. Persons ....................................... 301.01
r o d u c e.
Foreign Persons .................................... 301.02
o n ot rep
Source Rules for Gross Income ............................ y, d
onl 302.016
302
a l u s e
Person
Introduction ....................................... 9-0
Interest Income .................................... 2020-0302.02
Dividend Income ................................... 302.03
Personal Services Income ............................ 302.04
Rental and Royalty Income ............................ 302.05
Income from the Disposition of Property ................. 302.06
Income From Software, Digital Content, and Cloud
ro d u c e.
Transactions e
t r p
......................................
no of Income .............................. 302.08
302.07
n l y, d
Othero Types
s on al use o Distributive
- 0 9 - 0 6 Share of Income from a Pass-Through Entity .... 302.09
P e r 020 Rules for Expenses ................................ 303
2Source
Introduction ....................................... 303.01
Allocation ......................................... 303.02
Apportionment ..................................... 303.03
Specialized Apportionment Rules ....................... 303.04

r o d uc e.
r
PART II: TAXATION OF FOREIGN ACTIVITIES OFe p
U.S.
n
PERSONS
ot
Chapter 4: The Foreign Tax Credit , d o
ly the Dividends Received
onand
n a l u s e -06
Deduction
P e rs o 2 0 -0 9
Introduction to Reducing Double20Taxation ................... 401
Computing the Foreign Tax Credit ..................... 401.01
Credit versus Deduction ............................. 401.02
Who Can Claim a Credit? ............................. 401.03
Creditable Foreign Taxes ................................. 402
Qualifying Foreign Levies ............................ 402.01
r o d u c e.
Accounting Method ................................. 402.02ot
o n rep
n l y, d
Currency Translation ................................
n a l u s eo 402.03
-06
e r
Excess Credit Versus Excess Limitation Positionss o..............
0 -0 9
403
P
Purpose of the Limitation ............................. 202 403.01
Exemption for Individuals with De Minimis Foreign Tax
Credits ........................................... 403.02
Importance of Relative Tax Rates ....................... 403.03
Planning Implications ................................ 403.04
u c e
Strategies for Eliminating Excess .Credits .................... 404

o
Foreign Tax
no reprod Planning ....................... 404.01
t Reduction
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p r o d u ce. Paragraph
d o n o t re............. 404.02
u s e o nly,
Increasing the Foreign Tax Credit Limitation

rs o n l - 0 9 -0 6
Cross-Crediting a.................................... 404.03
Separate Income 2020
Pe Limitations .............................. 405
The History of Limitations ............................ 405.01
The Separate Income Limitations ....................... 405.02
Look-Through Rules ................................ 405.03
Partnerships ....................................... 405.04
Allocating Creditable Foreign Taxes .................... 405.05
Impact of Gains and Losses on the Limitations ................ 406 r o d u c e.
Capital Gains and Losses ............................. d406.01 o n ot rep
e y,
onl 406.026
a l u
Impact of Losses ...................................s 9-0
Person
Oil and Gas Activities ................................ 2 020-0406.03
Special Source-of-Income Rules ........................ 406.04
Excess Credit Carryovers ................................ 407
Computing the Alternative Minimum Tax Foreign Tax
Credit ................................................ 408
The Dividends Received Deduction ......................... 409
d u c e.
Dividend Income ...................................
ro 409.01
n
The Deemed r e p
ot Paid Foreign Tax Credit For Both Pre-2018 Years
l y, d o
s on al use on and - 0
For The Anti-Deferral Regimes .....................
-0 6
9Gross-Up
409.02
P e r 0 2 0 The for Deemed Paid Foreign Taxes ............ 409.03
2 The ‘‘In Lieu Of’’ Foreign Tax Credit for Withholding Taxes . . 409.04
The Dividends Received Deduction for Years After 2017 ..... 409.05
Planning for Repatriations ................................ 410
Minimizing Foreign Taxes ............................ 410.01
Alternatives to Dividend Repatriations ................... 410.02
Compliance Requirements ................................
r o d u c e. 411

, d o n ot rep
Appendix ............................................. 412
s eo n l y
s o n a l u
Regimes 0-09-06
e r
Chapter 5: Anti-Deferral
P 202
Subpart F ............................................. 501
Background ....................................... 501.01
Subpart F Overview ................................. 501.02
Definition of a Controlled Foreign Corporation ............ 501.03
Subpart F Income—Overview ......................... 501.04
Insurance Income .................................. 501.05
r o d u c e.
Foreign Base Company Income ........................ n ot
501.06
o rep
, d
only 501.076
l u s e
Special Exclusions and Inclusions ......................
P e sona
Investment of Earnings in U.S. Property r.................
2 0 2 0 -0 9-0
501.08
Deemed Paid Foreign Tax Credit ....................... 501.09
Mechanisms to Prevent Double Taxation ................. 501.10
Transition Tax (for 2017 Only) ......................... 501.11
Currency Translation ................................ 501.12
Earnings and Profits ................................. 501.13
Information Reporting for e
u c .
Subpart F .................... 501.14
Global Intangible
o no eprod Income ........................ 502
t rLow-Taxed
on l y, d
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xvi Contents in Detail

p r o d u ce. Paragraph
d o n o t re
o n l y,
Background ....................................... 502.01
o n l u se 9 -0 6
GILTI Overviewa.................................... 502.02
r s -0
020 Corporation ............ 502.03
Pe of a Controlled2Foreign
Definition
Definition of Net CFC Tested Income ................... 502.04
Definition of Net Deemed Tangible Income Return ......... 502.05
Comprehensive Determination of GILTI ................. 502.06
Mechanisms to Prevent Double Taxation ................. 502.07
Relief for a U.S. C Corporation with the Deemed Paid Foreign
Tax Credit and the GILTI Deduction .................... 502.08
r o d u c e.
Planning to Minimize the U.S. Tax on GILTI .............. o n ot
502.09 rep
y, d
onl 502.106
s e
Information Reporting for GILTI .......................
l u
P ersona
Passive Foreign Investment Companies ......................
2 0 9-0
20-0503
Background ....................................... 503.01
Definition of a PFIC ................................. 503.02
Taxation of a PFIC .................................. 503.03
Information Reporting for PFICs ....................... 503.04
Gain from the Sale or Exchange of a CFC’s Shares ............. 504

e p rod uce.
Appendix ............................................. 505
o no t r
n l y, d
n a l us e o 6: Foreign
Chapter
- 0 6 Currency Translation and Transactions
Perso 0 9
20-0 ...........................................
2Introduction
Foreign Currency Translation .............................
601
602
Qualified Business Unit .............................. 602.01
Functional Currency ................................ 602.02
Foreign Branches .................................. 602.03
Foreign Corporations ................................ 602.04
Foreign Income Taxes ...............................
r o d u c e. 602.05
o n o t
Special Rules for Hyperinflationary Currenciesrep............ 602.06
e
Foreign Currency Transactions
s o n ly, d
............................ 603
e r
Applicables o n al u ..............................
Transactions 0 -0 9 -06 603.01
P 202
Tax Consequences .................................. 603.02
Hedging Transactions ............................... 603.03
De Minimis Rule for Personal Transactions Entered Into by
Individuals ........................................ 603.04
Virtual Currency ....................................... 604

r o d u c e.
Chapter 7: Export Benefits
o n o t rep
e
The Export Benefits Saga .................................
s o n ly, d701
e r s o n al u
Introduction to the IC-DISC ............................... 0 -0 9
702-06
P 202
Taxation of an IC-DISC and Its Shareholders .............. 702.01
Tests to Qualify as an IC-DISC ......................... 702.02
Sales of Export Property ................................. 703
The Manufacturing Requirement ....................... 703.01
The Destination Requirement ......................... 703.02
The Maximum of 50% Foreign
o d u c e . Content
Requirement
no pr
t re...................................... 703.03
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Contents in Detail xvii

p r o d u ce. Paragraph
d o n o t re
o n l y,
Determining the IC-DISC Benefit ..........................
e ..........................
704
o n a l
Maximizing the IC-DISC’s u sIncome 9 -0 6 705
Grouping rs 2020 -0
Pe ......................................... 705.01
Marginal Costing ................................... 705.02
Expense Allocations ................................. 705.03
Loss Sales ........................................ 705.04
IC-DISC Comprehensive Example .......................... 706
The Deduction for Foreign-Derived Intangible Income .......... 707
r o d u c e.
Appendix .............................................
o n 708 ot rep
n l y, d
n a l u s eo -06
P e r s o 2 0 -0 9
Chapter 8: Planning for Foreign Operations
20
Introduction ........................................... 801
Evolution of Conducting a Foreign Business .................. 802
Entering a Foreign Market ............................ 802.01
Basic Tax Issues ................................... 802.02
Determinants of Foreign Country.Taxation ................... 803
r du c e
oOperation
n o t re
Structuring the Foreign p .......................... 804
o n l y, do ......................................... 804.01
Branches
s on al use 0 9 -06 ....................................... 804.02
Subsidiaries
-
P e r 2 0
20 Branch versus Subsidiary ............................. 804.03
Hybrid Entities ..................................... 804.04
Reverse Hybrid Entities .............................. 804.05
Dual Consolidated Loss Rules ......................... 804.06
Information Reporting for Foreign Partnerships ........... 804.07
Basics of Outbound Tax Planning ..........................
r o d u c e. 805
n ot r e p
Export Tax Benefits ................................. 805.01
, d o
onlyCountries6................. 805.02
Operating in Low-Tax
na l u s e
Foreign
PersinoHigh-Tax
Operating 0 2
Foreign 0 -0 9-0 ................ 805.03
Countries
2
Foreign Tax Reduction Planning ....................... 805.04
Tax-Efficient Supply Chain Management ................. 805.05
Foreign Holding Companies .......................... 805.06
Check-the-Box Elections and Qualified Dividend Income
Derived by U.S. Citizens and Resident Aliens .............. 805.07
r o d u c e.
Operating in Tax Havens ............................. 805.08
o n ot rep
Financial Reporting Implications of International , d
only 806 6
Tax Planning ..........................................
na l u s e
Perso 0 2 0 -0 9-0
Operations in High-Tax Foreign Countries ...............2 806.01
Operations in Low-Tax Foreign Countries ................ 806.02
Comprehensive Example ................................. 807
Tax Systems of the United States and Other Countries .......... 808
Survey of Foreign Entity Classification ....................... 809

o d u ce .
Appendix ............................................. 810
o t re p r
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xviii Contents in Detail

p r o d u ce. Paragraph
d o n o t re
PART III: TAXATION OF U.S. ACTIVITIES
o n l y, OF FOREIGN PERSONS
o n a l u seIncome of9Foreign
-06 Persons in the
United StatesP e rs
Chapter 9: Withholding on the
20 2 0 -0
The U.S. System for Taxing Foreign Persons .................. 901
Overview ......................................... 901.01
The Impact of U.S. Taxes on Total Tax Costs .............. 901.02
Withholding on U.S.-Source Fixed, Determinable, Annual, or
Periodic Income Under the FDAP Regime .................... 902
r o d u c e.
Introduction ....................................... 902.01
o n ot rep
Income and Persons Subject to Withholding .............. y, d
onl 902.036
902.02
l u s e
erso a Payments 9-0
Exemptions to Withholding and Special Rulesn .............
The Threat of Withholding on U.S.-SourcePWithholdable 2020-0
Under the FATCA Regime ................................ 903
Introduction to the FATCA Regime Under Chapter 4 ........ 903.01
Coordination of Withholding Between the FATCA and FDAP
Regimes .......................................... 903.02
FATCA Applies to Withholdable Payments ............... 903.03
FATCA Applies toro Foreign .
duceFinancial Institutions ........... 903.04
n re p
ot to Non-Financial Foreign Entities .......... 903.05
l y, d o
FATCA Applies

on al use on Refunds9 - 0 6
of FATCA Withholding ........................ 903.06
P e r s 020-0 Procedures Under the FDAP and FATCA Regimes . . . 904
2Withholding
Introduction ....................................... 904.01
Determining the Beneficial Ownership .................. 904.02
Presumptions in the Absence of Documentation ........... 904.03
Foreign Intermediaries .............................. 904.04
Taxation and Withholding on Sales of U.S. Real Property Interests . 905
Introduction .......................................
r o d u c e. 905.01
n ot r e p
U.S. Real Property Interests ........................... 905.02
only , d o
n a l u s
Special Rules for Certaine Dispositions
-
to Prevent Tax
06
P e
Avoidance rs o 0 -0 9
........................................
0 2 905.03
2
Withholding Requirement of 15% of Proceeds ............. 905.04
Taxation and Withholding on sales of U.S. Partnership Interests . . . 906
Appendix ............................................. 907

Chapter 10: Foreign Persons Conducting Business in the United

States
r o d u c e.
Taxation of Effectively Connected Income with a U.S. Trade or
o n ot rep
, d
only 1001 6
Business .............................................
l u s e
P e rsona
Determinants of U.S. Taxation .........................
2 0 2 0 -0 9-0
1001.01
Effectively Connected Income ......................... 1001.02
Applicable Tax Rates ................................ 1001.03
Foreign Tax Credit .................................. 1001.04
Alternative Minimum Tax ............................ 1001.05
The Branch Taxes ...................................... 1002
u c e .
The Branch Profits Tax .............................. 1002.01
Branch Interest rod
t repWithholding Tax ....................... 1002.02
l y, d o no
l us e on
Person
a
0 2 0 - 0 9-06
2
 p ro d u ce. 19
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

Contents in Detail xix

p r o d u ce. Paragraph
d o n o t re
o n l y,
Tax on Excess Interest ............................... 1002.03
a l u
The Anti-Earnings Stripping
o n seProvisions ......................
9 -0 6 1003
WhatP rs
IseEarnings Stripping? 20 -0
20........................... 1003.01
Calculating the Non-Deductible Interest ................. 1003.02
Debt/Equity Regulations ............................. 1003.03
Timing Restriction on Deductions of U.S. Subsidiaries ...... 1003.04
Planning for Earnings Stripping ........................ 1003.05
The Base Erosion Anti-Abuse Tax .......................... 1004
Returns and Payment of Tax .............................. 1005 r o d u c e.
o not rep
Appendix .............................................
o nly, d1006
n al u s e -06
P e r s o 2 0 -0 9
Chapter 11: Planning for Foreign-Owned United 20
States Operations
Introduction ........................................... 1101
Evolution of a Foreign-Owned U.S. Business .................. 1102
Entering the United States ............................ 1102.01
Determinants of U.S. Taxation ......................... 1102.02
Choice of Entity for U.S. Operations ........................ 1103
ro d u c e.
o n o ep
Branches .........................................
t r....................................... 1103.01
o n ly, d
Subsidiaries 1103.02
n al us e Branch - 0 6 Subsidiary .............................
versus 1103.03
r s o - 0 9
P e 2020Domestic Hybrid Entities ............................. 1103.04
Domestic Reverse Hybrid Entities ...................... 1103.05
Denying Deductions with Respect to Hybrids ............. 1103.06
Basics of Inbound Tax Planning ............................ 1104
Dividends ......................................... 1104.01
Debt Financing .................................... 1104.02
r o d u c e.
o n o t rep
Royalties ......................................... 1104.03

s e o n ly d
Fees for Management Services ,........................ 1104.04

rs o n lu -0 9 -06
Transfer Pricinga.................................... 1104.05
P
Comprehensive e Example 202 0
................................. 1105
Survey of U.S. Entity Classification ......................... 1106

PART IV: ISSUES COMMON TO OUTBOUND AND INBOUND ACTIVITIES

Chapter 12: Transfer Pricing
What Is Transfer Pricing? ................................ 1201
r o d u c e.
Transfer Pricing Methods ................................ 1202 ot
o n rep
n l y, d
Basic Principles ....................................
n a l u s eo 1202.01
-06
e r s o
Transfers of Tangible Property ........................
0 -0 9
1202.02
P
Transfers of Intangible Property .......................202 1202.03
Loans and Advances ................................. 1202.04
Performance of Services .............................. 1202.05
Use of Tangible Property ............................. 1202.06
Correlative Adjustments .............................. 1202.07

od u c e .
Setoffs ........................................... 1202.08

d o no t reprRequirements
Information Reporting ........................ 1203
e on l y,
a l us 9-06
Person 20 2 0 - 0
 p ro d u ce. 20
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

xx Contents in Detail

p r o d u ce. Paragraph
o n o re
t................
o n l y, d
Transfer Pricing Penalties and Documentation 1204
a
Preparing Transfer
o n l u se Documentation
Pricing
9 -0 6 ............... 1204.01
r
Informations 2020 -0
Pe Gathering ............................... 1204.02
Identification of the Best Method ....................... 1204.03
Economic Analysis .................................. 1204.04
Developing a Transfer Pricing Strategy ...................... 1205
Appendix ............................................. 1206

r o d u c e.
Chapter 13: Tax Treaties
o n ot rep
Introduction ........................................... y, d1301
onl 1302 6
a l u s e
Common Treaty Provisions ...............................
Person 9-0
Definition of Resident ................................ 2020-01302.01
Business Profits and Permanent Establishments ........... 1302.02
Personal Services Income ............................ 1302.03
Withholding on Dividends, Interest, and Royalties .......... 1302.04
Gains from the Disposition of Property .................. 1302.05
Income from Real Property ........................... 1302.06
o ce .
du...............................
re p r
Associated Enterprises 1302.07
otShopping Provisions (Limitation on Benefits) ..... 1302.08
l y, d o n
Anti-treaty

s on al use on Non-Discrimination
9 - 0 6 Provisions .........................
-0 Agreement Procedure ......................... 1302.10
1302.09
P e r 2020Mutual
Exchanges of Information ............................ 1302.11
Disclosure of Treaty-Based Return Positions .................. 1303
Specific Disclosure Requirements ...................... 1303.01
Waiver of Disclosure Requirements ..................... 1303.02
U.S. Compliance for Foreign Country Treaty Purposes ...... 1303.03
United States Model Income Tax Convention of 2016 ...........
r o d u c e. 1304
not r e p
Appendix ............................................. 1305
o n l y, do
s o n a l use -0 9 -06 and Foreign-to-
P e r
Chapter 14: Section
02
367—Outbound, 0 Inbound,
Foreign Transfers of Property 2
Outbound Transfers of Property to a Foreign Corporation ........ 1401
Outbound Toll Charge ............................... 1401.01
Deemed Royalty Regime for Intangible Property ........... 1401.02
Branch Loss Recapture Rule .......................... 1401.03
Liquidation of a U.S. Subsidiary into Its Foreign Parent ...... 1401.04
r o d u c e.
Information Reporting for Outbound Transfers ............ n ot
1401.05
o rep
, d
only 1401.06
Transfers to Non-Corporate Foreign Entities ..............
n l u s e
a into Its U.S.0-09-06
r s o
Inbound Transfers—Liquidation of a ForeigneSubsidiary
P
Parent ............................................... 202 1402
Acquisitive Reorganizations—Background ................... 1403
Outbound Transfers in an Acquisitive Reorganization ........... 1404
Outbound Type A Statutory Mergers .................... 1404.01
Outbound Type B Share-For-Share Acquisitions ........... 1404.02

d u c e .
Outbound Type C Share-For-Asset Acquisitions ............ 1404.03

d o no t reproTriangular Mergers .................. 1404.04

Outbound Forward
e on l y,
a l us 9-06
Person 20 2 0 - 0
 p ro d u ce. 21
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

Contents in Detail xxi

p r o d u ce. Paragraph
d o n o t re
Outbound Reverse Triangular y
o n l ,
Mergers .................. 1404.05
o n a l u se To Prevent9Outbound
The Anti-Inversion Provisions -06
Transfers P ers 20 2 0 - 0
............................................. 1405
Inbound Transfers in an Acquisitive Reorganization ............ 1406
Inbound Type A Statutory Mergers ..................... 1406.01
Inbound Type B Share-For-Share Acquisitions ............. 1406.02
Inbound Type C Share-For-Asset Acquisitions ............. 1406.03
Inbound Forward Triangular Mergers ................... 1406.04
Inbound Reverse Triangular Mergers ................... 1406.05
r o d u c e.
Foreign-To-Foreign Transfers in an Acquisitive Reorganization .... d1407o n ot rep
e y,
onl 1407.01
o n a u s
Foreign-To-Foreign Type A Statutory Mergers ............
l 9 -06
P e r
Foreign-To-Foreign Type B Share-For-Share s Acquisitions
20 2
....0 -01407.02
Foreign-To-Foreign Type C Shares-For-Asset Acquisitions . . . 1407.03
Foreign-To-Foreign Forward Triangular Mergers .......... 1407.04
Foreign-To-Foreign Reverse Triangular Mergers ........... 1407.05
Appendix ............................................. 1408

Chapter 15: State Taxation r o d

of u c e.
International Operations
r e p
ot Corporate Income Taxes ................... 1501
ofnState
Overview
l y, d o
s on al use on Conformity
- 0 9 - 0 6 to Federal Tax Base ........................ 1501.01
P e r 2020Conformity to Federal Foreign-Derived Intangible Income
Deduction ........................................ 1501.02
Consolidated and Combined Reporting .................. 1501.03
Apportionment ..................................... 1501.04
Business versus Nonbusiness Income ................... 1501.05
Review of Federal Taxation of Income from Foreign Subsidiaries . . 1502
Dividend Distributions ...............................
o d uce . 1502.01
ot r e p r
, d o n
Subpart F Inclusions ................................
ly .................... 1502.03
1502.02
s
Global Intangible Low-Taxed
l u e onIncome
e rs o n a Tax on Deferred0 -0 9 -06 Income ...... 1502.04
P
One-Time Transition
202 Foreign
Worldwide Versus Water’s-Edge Combined Reporting .......... 1503
Foreign Dividends, Subpart F Inclusions and GILTI Inclusions .... 1504
Inclusion of Foreign Dividends in Apportionable Income ..... 1504.01
State Dividends-Received Deductions ................... 1504.02
Apportionment Factor Relief .......................... 1504.03
Subpart F Inclusions ................................ 1504.04
r o d u c e.
Global Intangible Low-Taxed Income (GILTI) ............. n ot
1504.05
o rep
One-Time Transition Tax on Deferred Foreign Income e , d
only 1504.06
......
o n a l u s 9 -06
r s
Federal Check-The-Box Elections ..........................
e
P .................. 0 -
202 15060 1505
Treatment of Foreign Income Tax Payments
Federal Tax Treatment ............................... 1506.01
State Tax Treatment ................................. 1506.02
State Versus Federal Nexus Standards for Foreign Corporations . . 1507
Federal Nexus Standards ............................. 1507.01
u c e .
State Nexus Standards ............................... 1507.02
Implications
no prodfor State but Not Federal Tax Purposes
t rofeNexus 1507.03
on l y, d o
l us e
Person
a
0 2 0 - 0 9-06
2
 p ro d u ce. 22
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

xxii Contents in Detail

p r o d u ce. Paragraph
d o n o t re
u s e o nly,
P e rsonal Tax Practice
Chapter 16: International
20 2 0 -0 9
and 06
-Procedure
Introduction ........................................... 1601
Organization of the Internal Revenue Service
International Offices ..................................... 1602
International Examinations ............................... 1603
Large Business & International Examination Process ....... 1603.01
Other Examinations ................................. 1603.02 r o d u c e.
Taxpayer Resolution Options .......................... , d1603.03 o n ot rep
s e y
onl 1603.04
Practice Units of LB&I for Audits of International
s o n a l u
Issues .....
-0 9 -06
P e r
Statute of Limitations ................................ 20 2 0 1603.05
IRS Information Gathering Tools ........................... 1604
Information Document Requests ....................... 1604.01
On Site Inspections ................................. 1604.02
The Summons Power ................................ 1604.03
Designated Summonses
r o d u c e.
.............................. 1604.04
n ot re p
n l y, d o
Formal Document Requests ........................... 1604.05

s on al use o Transfer
- 0 9 - 0 6Pricing Documentation ....................... 1604.06
P e r 2020Code Secs. 6038A and 6038 ........................... 1604.07
Exchanges of Information Under Tax Treaties ............. 1604.08
Conclusion of an Examination and the Appeals Division of the IRS . 1605
Settling Issues ..................................... 1605.01
Protest Requirements ............................... 1605.02
Procedure at the Appeals Division ......................
r o d u c e. 1605.03
o n o t rep
Settlement Agreements .............................. 1605.04
ly, d
on...........................
Competent Authority Procedure
n a l u s e -0 6 1606
Mutual rso
PeAgreement Procedure -09
2020......................... 1606.01
Simultaneous Appeals Procedure ....................... 1606.02
Accelerated Competent Authority Procedure .............. 1606.03
Legal Actions by Taxpayers ............................... 1607
Uncertain Tax Positions and Schedule UTP ................... 1608
Offshore Compliance .................................... 1609
r o d u c e.
Potential FBAR Filers ................................ ot
1609.01
o n rep
, d
only 1609.02
Statement of Specified Foreign Financial Assets ...........
n a l u s e -06
e r s o 0 -0 9
Penalties for Underpayment Attributable P to Undisclosed
Foreign Financial Assets ............................. 202 1609.03
Appendix ............................................. 1610

Index

p ro d u ce.
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0
 p ro d u ce. 23
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

Contents in Detail xxiii

p r o d u ce.
List of Appendices
d o n o t re
u s e o nly, Page
al -06
IRS FORMS Person 20 2 0 -0 9
926 Return by a U.S. Transferor of Property to a Foreign
Corporation ...................................... 800
1040-NR U.S. Nonresident Alien Income Tax Return .............. 528
1042 Annual Withholding Tax Return for U.S. Source
r o d u c e.
Income of Foreign Persons .......................... 454
d o n o t rep
1042-S Foreign Person’s U.S. Source Income Subject e to only,
o n al u s 9 -06
P e r s
Withholding .....................................
20 2 0 -0 452
1042-T Annual Summary and Transmittal of Forms 1042-S ........ 453
1116 Foreign Tax Credit ................................ 151
1118 Foreign Tax Credit—Corporations .................... 154
Schedule J Adjustments to Separate Limitation Income (Loss)
(1118) d
Categories for
ro u c e.
Determining Numerators of Limitation
no t re p
Fractions, Year-End Recharacterization Balances, and
o n l y, do
s on a l use - 0 9 -
Overall Foreign and Domestic Loss Account Balances .... 168
06Uncertain Tax Position Statement .....................
P e r 20 2
Schedule0 UTP 854
(1120)
1120-F U.S. Income Tax Return of a Foreign Corporation ......... 534
Schedule H Deductions Allocated to Effectively Connected Income
(1120-F) Under Regulations Section 1.861-8 .................... 542
Schedule I d
Interest Expense Allocation Under Regulations
r o u c e.
p
(1120-F) o not re
Section 1.882-5 ...................................
nly, d
544
Schedules M-1 a l u s
Reconciliation
n eof oIncome (Loss)
-0 6and Analysis of
rs o
PeUnappropriated -0 9
020 Earnings per Books ........... 547
and M-2
(1120-F)
2
Retained

1120-IC-DISC Interest Charge Domestic International Sales

Corporation Return ................................ 324
Schedule K Shareholder’s Statement of IC-DISC Distributions ........ 331
(1120-IC-DISC)
r o d u c e.
Schedule P Intercompany Transfer Price or Commission ............o332 n o t rep
(1120-IC-DISC) s e o n ly, d
e r s o n al u 0 -0 9 -0 6
1125-A P 202
Cost of Goods Sold ................................ 548
2555 Foreign Earned Income ............................. 43
4564 Information Document Request ...................... 852
4876-A Election To Be Treated as an Interest Charge DISC ....... 323
5471
o d u c e
Information Return .of U.S. Persons With Respect To
Certain r
t repForeign Corporations ........................ 240
l y, d o no
l us e on
Person
a
0 2 0 - 0 9-06
2
 p ro d u ce. 24
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

xxiv Contents in Detail

p r o d u ce. Page
o t r e
noProfits
Schedule E
o n l y,
Income, War Profits, and d
Excess Taxes Paid or
(5471) Accrued
o n a l u se -06
.........................................246,
9
Pers 20 2 0 -0 249
Schedule H Current Earnings and Profits ........................ 252
(5471)
Schedule I-1 Information for Global Intangible Low-Taxed Income ...... 253
(5471)
Schedule J Accumulated Earnings and Profits (E&P) of
r o d u c e.
(5471) n
Controlled Foreign Corporation ......................254,
o ot rep
y, d
e onl
al us
257
0 6
Schedule M Transactions Between Controlled on Corporation
PersForeign 2 0 20-09-
(5471) and Shareholders or Other Related Persons ............. 260
Schedule O Organization or Reorganization of Foreign
(5471) Corporation, and Acquisitions and Dispositions of its
Stock ........................................... 261
Schedule P
c e .
Previously Taxed Earnings and Profits of U.S.
(5471)
o n o eprodofuCertain Foreign Corporations ............ 263
Shareholder
tr
5472only, d Information Return of a 25% Foreign-Owned U.S.
n al us e - 06Corporation or a Foreign Corporation Engaged in a
P e r s o 2 0 - 0 9
20 U.S. Trade or Business .............................630,
633
8233 Exemption From Withholding on Compensation for
Independent (and Certain Dependent) Personal
Services of a Nonresident Alien Individual .............. 462
8288 U.S. Withholding Tax Return for Dispositionsu
r o d c
by e.
, d o ot repInterests .......... 469
Foreign Persons of U.S. Real Property
n
8288-A Statement u eo n l y
ofsWithholding on Dispositions by Foreign
rs o n a l -0 9 - 6
0Interests
P ePersons of U.S.
202
Real 0
Property ................. 470
8288-B Application for Withholding Certificate for
Dispositions by Foreign Persons of U.S. Real Property
Interests ........................................ 472
8621 Information Return by a Shareholder of a Passive
Foreign Investment Company or Qualified Electing
r o d u c e.
Fund ........................................... 276
o n o t rep
8802 n
Application for United States Residency Certification
e o , d 750
ly......
o n s
al uTax 9 -06
8804 r s
Annual Return for PartnershipeWithholding
P 202 0 -0
(Section 1446) .................................... 458
8805 Foreign Partner’s Information Statement of Section
1446 Withholding Tax .............................. 460
8813 Partnership Withholding Tax Payment Voucher
(Section 1446) .................................... 457
p ro ce.
du Election ......................... 382
8832
o no t r e
Entity Classification
on l y, d
l us e
Person
a
0 2 0 - 0 9-06
2
 p ro d u ce. 25
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0

Contents in Detail xxv

p r o d u ce. Page
o ot r e
nDisclosure
8833
o n l y, d
Treaty-Based Return Position Under
o n l u
Sectiona6114 sore7701(b) .............................
9 -0 6 748
8840 rs Connection
PeCloser 20-0 Statement for Aliens ......... 50
20Exception
8843 Statement for Exempt Individuals and Individuals
With a Medical Condition ............................ 47
8854 Initial and Annual Expatriation Statement ................ 53
8858 Information Return of U.S. Persons With Respect To
Foreign Disregarded Entities (FDEs) and Foreign
r o d u c e.
Branches (FBs) ................................... 386
o n ot rep
onl y, d
8865 l u
Return of U.S. Persons With Respect to Certain
n a s e -06
P e r s o 0
Foreign Partnerships .............................. 2 0 -0 9392
2
Schedule O Transfer of Property to a Foreign Partnership (Under
(8865) Section 6038B) ................................... 398
Schedule K-1 Partner’s Share of Income, Deductions, Credits, etc. ....... 399
(8865)
8938
ro d uc e. Foreign Financial Assets .......... 858
Statement of Specified
8975 n o t re p
Country-by-Country Report .......................... 637
y
onl A , d o
n a l us e
Schedule
- 0 Tax Jurisdiction and Constituent Entity Information .......638,
6
Perso (8975)20-0 9 639
20
8966 FATCA Report .................................... 483
8992 U.S. Shareholder Calculation of Global Intangible Low-
Taxed Income (GILTI) ............................. 271
8993 Section 250 Deduction for Foreign-Derived Intangible
Income (FDII) and Global Intangible Low-Taxed .
e p r o d uce
n o t r
Income (GILTI) ................................... 335
FinCEN Form Report of ForeignoBank doFinancial Accounts .......... 861
nly,And
114 s o n a l use -0 9 -06
e r 0
202 Status of Beneficial Owner for
P Certificate of Foreign
W-8BEN
United States Tax Withholding and Reporting
(Individuals) ..................................... 467
W-8BEN-E Certificate of Status of Beneficial Owner for United
States Tax Withholding and Reporting (Entities) ......... 474
W-8ECI Certificate of Foreign Person’s Claim That Income Is
r o d u c e.
Effectively Connected With the Conduct of a Trade or o n ot rep
, d
o n al use only 465
Business in the United States ........................
9 -06
P e r s 202 0 -0

p ro d u ce.
d o n o t re
us e o nly,
al 9-06
Person 20 2 0 - 0
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