Browse Articles:   By Category   /   By Author
HIDE

Other Publications

Insights

Publications

2016 Model Treaty – Limitation on Benefits Revisions

/

On February 17, 2016, the Treasury Department released its 2016 Model Treaty. The model serves as the baseline from which the U.S. initiates treaty negotiations. Various provisions are discussed in detail in this month’s Insights.

Those who thought that the limitation on benefits (“L.O.B.”) provision under the U.S.-Netherlands Income Tax Treaty was complex will find that the level of complexity in the 2016 Model Treaty has been raised several levels. Some taxpayers will be losers and others will be winners. Philip R. Hirschfeld and Galia Antebi explain how the revised provision will work.

Read More

Insights Vol. 3 No. 2: Updates & Other Tidbits

/

This month, Insights looks at the latest development in the deferred prosecution agreement with Swiss banks, a property tax increase in Jerusalem for “ghost apartments,” Canadian procedures to exempt foreign employers from withholding tax on salaries paid to certain individuals that are resident outside of Canada but work in Canada from time to time, and the adverse effect outside the U.S. of deferred CbC reporting for U.S.-based multinationals.

Read More

Insights Vol. 3 No. 2: F.A.T.C.A. 24/7

/

This month, Insights looks at the I.G.A. experience in Mexico; updated Form W-8BEN-E and instructions; an announcement on forthcoming regulations that will ease burdens on F.F.I.’s; new I.G.A. competent authority arrangements signed with Norway, Barbados, Romania, Spain, Italy, and Costa Rica; a new I.G.A. with St. Lucia; and the most recent list of I.G.A. partner countries.

Read More

Partnership Tax Traps and Recent Guidance

/

At the end of 2015, the I.R.S. issued a notice designed to limit the instances in which contributions of property to foreign partnerships benefit from nonrecognition of gain. In January, the I.R.S. came under pressure to modify its announced position in final regulations that are currently being developed. Philip R. Hirschfeld explains.

Read More

Insights Vol. 3 No. 1: F.A.T.C.A. 24/7

/

This month, recent developments in F.A.T.C.A. include the D.O.J.’s Swiss bank deferred prosecution program; new instructions for Form 8966, F.A.T.C.A. Report; six new YouTube videos regarding the Online Registration System; extension of time to file F.A.T.C.A. Reports; upgrade to F.F.I. lists, the current I.G.A. partner countries, and more.

Read More

P.A.T.H. Act Leads to Widespread Tax Changes

/

Everyone likes Christmas presents and the P.A.T.H. Act delivers. It provides favorable tax treatment in the form of (i) F.I.R.P.T.A. exemptions for foreign pensions funds, (ii) increased ownership thresholds before F.I.R.P.T.A. tax is imposed on C.I.V. investment in R.E.I.T.’s, (iii) increased ownership thresholds before F.I.R.P.T.A. tax is imposed on foreign investment in domestically-controlled R.E.I.T.’s, (iv) a reduction in the time that must elapse in order to avoid corporate level tax on built-in gain when an S-election is made by a corporation after the close of the year of its formation, and (v) a permanent exemption from Subpart F income for active financing income of C.F.C.’s.

However, not all taxpayers benefitted from the Act. The P.A.T.H. Act increases F.I.R.P.T.A. withholding tax to 15%, adopts new partnership tax examination rules, and tightens rules regarding I.T.I.N.’s. Elizabeth V. Zanet, Christine Long, Rusudan Shervashidze, and Philip R. Hirschfeld explain these and certain other legislative changes.

Read More

Insights Vol. 2 No. 10: F.A.T.C.A. 24/7

/

Recent developments in the F.A.T.C.A. practice include upgrades to the online registration system, a flurry of competent authority arrangements signed with other countries, F.A.T.C.A. guidance issued by the Turks and Caicos Islands, new authorizing statutes in Russia and Georgia, an implementing memorandum in Germany, an I.G.A. with Angola, updated F.A.Q.’s, and a list of Model 1 and Model 2 I.G.A. partner countries.

Read More

Congress Enacts Sweeping New Partnership Audit Rules

/

Partnerships owning real estate or other assets sometimes take aggressive tax positions that may invite I.R.S. scrutiny. Philip R. Hirschfeld and Nina Krauthamer explain the new partnership audit rules enacted by Congress in November as part of the Bipartisan Budget Act of 2015. With limited exception, partnerships will become liable for tax increases arising from audit adjustments. This treatment raises the importance of tax indemnities when partnership interests are acquired.

Read More

The Transparent World: Exchange of Information Has Begun & Pacts to Assist Implementation Have Been Signed

/

Despite efforts to repeal F.A.T.C.A. in the U.S. and opposition from abroad, it appears that F.A.T.C.A. is here to stay. Galia Antebi and Philip R. Hirschfeld address the recent September 30 milestone and the advent of exchanges of financial account information with tax administrations of I.G.A. partner jurisdictions.

Read More

President's Legislative Proposals

/

In late September, the Obama Administration released the tax revisions that are part of its Fiscal Year 2016 Budget Proposal (the Proposal). These changes are designed to provide deficit reduction measures through additional revenue increases and spending cuts. We explain the new twists to seasoned proposals. If enacted, the changes described in the Proposal could influence global patterns of investment and employment by U.S. multinationals.

Read More

Foreign Investment in U.S. Real Estate – Think About Taxes Before Investing→

/

Published in Journal of Taxation of Investments, Volume 32, Number 3: Spring 2015. © Civic Research Institute. Authorized Reprint.

Read More

Insights Vol. 2 No. 8: F.A.T.C.A. 24/7

/

This month, Philip R. Hirschfeld and Galia Antebi report on Republican-led efforts to curtail F.A.T.C.A., new F.A.Q.’s released by the U.S. and Mauritius, publication of the St. Kitts and Nevis I.G.A., updated foreign account reporting procedures, and much more.

Read More

Albermarle: Refund Claims Relating to Foreign Tax Credits

/

We analyze a recent U.S. Court of Appeals case, Albemarle Corp. v. United States, that affirmed certain refund claims were barred by the statute of limitations. The case involved withholding taxes on payments of interest to Albemarle Corp. from its Belgian subsidiary during the years 1997 to 2001. The court held that the taxpayer’s claims for refunds, attributable to foreign tax credits, were time-barred in certain years.

Read More

Purchasing a Partnership/LLC Interest: Tax Tip #2 – Code Section 754 Election→

/

Published by the American Bar Association in the Real Property Trust & Estate eReport, August 2015.

Read More

Insights Vol. 2 No. 7: F.A.T.C.A. 24/7

/

July and August were busy months for F.A.T.C.A. developments. We explain the highlights:  The I.R.S. notified countries with early I.G.A.’s that more favorable provisions are available, but the notice may escalate the on-boarding controversy with Canada and the U.K.  The Common Reporting Standard (C.R.S.) is moving forward – either with or without U.S. participation – and global F.I.’s must adjust reporting systems.  Iceland and the United Arab Emirates publish F.A.T.C.A. guidance.  Belarus ratified the I.G.A. with the U.S. Italy published an implementation decree for exchange of information. Turkey and Slovakia signed Model 1 I.G.A.‘s. Mauritius and Luxembourg extend local F.A.T.C.A. reporting deadlines.

Read More

U.S. Taxation of Carried Interest

/

Favorable long-term capital gains tax treatment for managers of hedge funds has been under attack by the Obama Administration. While the industry defended itself from outright changes to favorable tax treatment, the I.R.S. recently proposed to disallow favorable treatment where a manager’s right to payments bears no entrepreneurial risk. Nina Krauthamer, Philip R. Hirschfeld, and Kenneth Lobo explain.

Read More

Insights Vol. 2 No. 6: F.A.T.C.A. 24/7

/

Read Publication

F.A.T.C.A.’S FIRST ANNIVERSARY: AN ASSESSMENT

On July 1, the Foreign Account Tax Compliance Act (“F.A.T.C.A.”) celebrated the first anniversary of its implementation. F.A.T.C.A. was created to improve international tax compliance and combat offshore tax evasion. Notwithstanding dire predictions about its impact on the financial community when F.A.T.C.A. was first enacted in 2010, the sky has not yet fallen as of its first anniversary.

Reinsurance Case Invalidates Tax on Foreign-to-Foreign Withholding Transactions

/

Read Publication

A “cascading tax” is a tax that is enforced more than once on the income from the same transaction or related transactions. A common example involves a back to back license in which:

  • A non-U.S. individual or corporation (“A Co.”) licenses the rights to use intellectual property (“I.P.”) in the U.S. to another non-U.S. corporation (“B Co.”); and
  • B Co. then sub-licenses the same rights to use the I.P. to a U.S. corporation (“C Co.”).

Legislation to Relax F.I.R.P.T.A. Gets Bipartisan Support

/

Read Publication

Tax legislation to encourage foreign investment in U.S. real estate made through real estate investment trusts (“R.E.I.T.’s”) was recently introduced in both the House and the Senate. Representatives Kevin Brady (R-T.X.) and Joe Crowley (D-N.Y.), introduced H.R. 2128, the “Real Estate Investment and Jobs Act of 2015.” The measure, backed by 22 bipartisan members of the U.S. House of Representatives, would make significant changes to the Foreign Investment in Real Property Tax Act (“F.I.R.P.T.A.”). The bill is similar to legislation Representatives Brady and Crowley introduced in the last session of Congress, as well as a companion version introduced in the U.S. Senate this year, co-authored by Senators Mike Enzi (R-W.Y.) and Bob Menendez (D-N.J.), S. 915. The Senate version would adopt additional changes including a proposed increase in F.I.R.P.T.A. withholding tax rates that would complicate investing by those not benefitting from the proposals. Enactment of the significant provisions in H.R. 2128 and S. 915 would signify an important step toward achieving F.I.R.P.T.A. reforms that have been advocated for by a number of real estate organizations for many years.

R.E.I.T. QUALIFICATION

A R.E.I.T. is a creation of the tax law. Any corporation, trust, or unincorporated entity may qualify as a R.E.I.T. if it meets the requirements of Code §856. A benefit of R.E.I.T. status is that it is a conduit for tax purposes, provided distributions are made to shareholders. No tax is imposed on the R.E.I.T. if it distributes all its income to its owners. The R.E.I.T. claims a deduction for dividends that it pays to its shareholders. In addition, a shareholder of the R.E.I.T. may be able to treat a dividend from the R.E.I.T. as taxable at capital gains rates if the underlying income of the R.E.I.T. that generates the dividend arises from the sale of an asset.

Purchasing a Partnership/LLC Interest: Tax Tip #1–Requiring Tax Distributions→

/

Published by the American Bar Association in the Real Property Trust & Estate eReport, May 2015.

Read More