Tax Traps in Loans to LLCs
As I discussed in two earlier blogs, joint ventures (JVs) need not—and often should not—be structured as tax entities (4/30/12), but if they are, a limited liability company (LLC) has become the entity...
View ArticleValue Considerations When Structuring A Joint Venture
In prior blogs (4/30/12 and 4/17/12) I discussed some key considerations in structuring a joint venture or alliance (JV) and focused on some of the issues that inform the decision whether to structure...
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U.S. Corporations Act Responsibly in Reducing Foreign Taxes
Tax (Photo credit: 401K 2012) The U.S. is indisputably number one in one category—it imposes the highest tax rate on corporate income of any industrialized country. The combined U.S. federal and state...
View ArticleHidden Tax Costs with Credit Support From Foreign Subsidiaries
In today’s economic environment, lenders often seek to maximize the amount of collateral supporting a borrower’s loan. But a borrower needs to be aware that securitizing a loan with assets or stock of...
View ArticleQuarter-End Foreign Subsidiary Loans Not Subject to Taxation
A U.S. company can borrow cash from its foreign subsidiaries over quarter ends and use the funds to reduce third-party borrowings, which can positively affect the company’s credit rating. For,...
View ArticleS Corporations With Foreign Operations Must Act Fast To Avoid an Even Steeper...
The income of an S corporation is taxable to its shareholders at individual tax rates. If the Bush tax cuts expire at the end of 2012, the top individual tax rate—with the new Medicare Tax—will...
View ArticleA Tax Deduction for Losses from Shutting Down a Foreign Business Can...
Rosy projections for a new foreign business can turn into shocking pain if the business goes under and there is no tax deduction for the lost investment—especially when the loss could have been...
View ArticleAvoid U.S. Sandwich Structures Like the Plague
Foreign investors who are acquiring a U.S. multinational target should (if possible) acquire the non-U.S. subsidiaries directly, or else U.S. taxes could devour the foreign profits. To illustrate,...
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U.S. Owners Can Get Back Their Investments in Foreign Subsidiaries Without...
Taxes (Photo credit: Tax Credits) The tax rate on U.S. corporate earnings generally is around 40%, but a 64% rate can apply to earnings invested in a foreign subsidiary. Good news—the 24% additional...
View ArticleU.S. Tax System Favors Foreign Ownership
The U.S. corporate tax system is one of the most burdensome in the world, creating a substantial economic benefit for foreign ownership—rather than U.S. ownership—of a multinational business. U.S....
View ArticleSelling Foreign Subsidiaries Without Tax Cost
Gain on the sale of stock in a foreign subsidiary generally is subject to U.S. taxation. This is the case whether the stock is sold by a U.S. parent or by an intermediate foreign holding company....
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Saving Taxes Through Cost Sharing Intangible Property With Foreign Subsidiaries
Globe (Photo credit: Wikipedia) Cost sharing arrangements (CSAs) permit all foreign profits derived from exploiting developed intellectual property (IP) to be earned by foreign subsidiaries. Such...
View ArticlePlanning for Intellectual Property Income — How “Patent Box” Regimes Can Help...
If your company has valuable intellectual property (IP), you should consider taking advantage of a “patent box” regime as a strategy for reducing global tax costs. What is a “Patent Box” regime? A...
View ArticleStaying Competitive — Incorporating Beneficial Foreign Intangible Property...
To stay competitive, many multinational companies are looking at restructuring as a means of lowering taxes paid on income derived from intangible property (IP). Discussed here are some of the key...
View ArticleFiscal Cliff Tax Deal Extends Key International Rule
The tax deal struck over the holidays (The American Taxpayer Relief Act of 2012 (H.R. 8)) temporarily extends a key international tax rule averting the inappropriate U.S. taxation of business earnings...
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S Corporations Should Consider Incorporating Foreign Branch Operations in...
taxes (Photo credit: 401(K) 2013) As I pointed out in a blog in early 2012, there are 4.5 million S corporations in the U.S. (S Corporation Association). These businesses are operated in pass-through...
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Key Exception for Foreign Banking and Finance Income Extended by Fiscal Cliff...
The tax deal struck over the holidays (The American Taxpayer Relief Act of 2012 (H.R. 8)) temporarily extends a key international tax rule averting the inappropriate U.S. taxation of business earnings...
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Corporations Can Prepay Royalties To Access Foreign Cash
Seal of the United States Internal Revenue Service. The design is the same as the Treasury seal with an IRS inscription. (Photo credit: Wikipedia) Foreign subsidiaries of U.S. multinationals generally...
View ArticleSenate Proposal Would Hurt Corporate Investment In U.S.
A harsh rule in the Internal Revenue Code taxes foreign subsidiaries’ profits when funds are loaned to a U.S. company or invested in U.S. stock. These are considered “investments in U.S. property.”...
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