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When Does an Aged Account Receivable Give Rise to a Deemed Repatriation?

Volume 4 No 10    /    Read Article

By Elizabeth V. Zanet and Stanley C. Ruchelman

One form of taxation under Subpart F is an “investment in U.S. Property.” The law treats the investment as a form of taxable repatriation of earnings. Under certain circumstances, aged accounts receivable may be seen as a form of taxable investment in U.S. property. Most U.S. tax advisers look to a 60-day rule under which the account receivable is treated as a loan if not settled by the last day of the second month following a sale. However, that is a safe harbor. I.R.S. private letter rulings and Tax Court cases have addressed fact patterns in which the account receivable remains open for a much longer time. Some taxpayers win and others lose. Elizabeth V. Zanet and Stanley C. Ruchelman explain.    See more →