Multinational enterprises are typically engaged in the transfer of goods, intangibles and services with affiliated companies. To determine tax liability in each tax jurisdiction (e.g., U.S. vs. foreign), a defensible, arm's length transfer price has to be determined and applied. Transfer pricing involves the process of determining the appropriate price one related-party charges another.
Because of certain “high profile” court cases and IRS audits involving transfer-pricing issues, multinational enterprises recognize the need for a transfer pricing analysis to support the amounts charged between related parties. To learn more, please contact Dennis Petri or Bill Kingsley.
The newly enacted Tax Cuts and Jobs Act (the "Act") gave us what some people refer to as "mandatory repatriation" for previously untaxed foreign earnings of specified foreign corporations. In other words, Section 965 of the Internal Revenue Code now requires some taxpayers to pay tax on the untaxed foreign earnings of certain foreign corporations as if the earnings had been repatriated to the United States. This will take effect for the 2017 tax year for a majority of taxpayers.
US individual shareholders of controlled foreign corporations (CFCs) are currently grappling with the one-time US transition tax on post-1986 deferred foreign income accumulated by their CFCs and the impact of new anti-deferral income inclusion rules referred to as the global intangible low-taxed income (GILTI) provisions, along with other generational changes to the US international tax rules, as the United States transitions from a worldwide tax system to a quasi-territorial tax system.
The Internal Revenue Service has recently announced the launch of country-by-country (CbC) reporting pages on irs.gov which will provide background information on CbC reporting, frequently asked questions and other helpful resources, including a list of jurisdictions that have concluded competent authority arrangements with the United States.
According to UHY partner Christopher Byrne, Internal Revenue Code § 121 provides taxpayers with an exclusion from gross income of up to $250,000 of gain on the sale of a taxpayer’s principal residence. A married couple filing a joint return may exclude up to $500,000. In order to qualify for the exclusion, the residence must have been the taxpayer’s principal residence for an aggregate of 2 years or more during the 5 year period leading up to the sale. The determination of a principal residence is a question of facts and circumstances.
In an ever-globalizing world, U.S. tax payers are looking abroad for their insurance needs. According to UHY partner Christopher Byrne, while taxpayers may find certain benefits from policies issued by a foreign insurer that they might not find domestically, many find themselves with a rude awakening when they are hit with a surprise surcharge from the IRS. Pursuant to Internal Revenue Code § 4371(2), a one percent excise tax is charged on the premium paid on a policy for life, sickness, or accident insurance or an annuity contract.