U.S. Income Taxation of Foreign Governments, International Organizations and Their Employees discusses the income tax exemptions under §§892, 893, and 895 of the Code. Written by Brett R. Dick, Esq., this Portfolio discusses the development of the exemption under §892 for foreign governments and international organizations, particularly the limitations placed on the scope of the exemption by the 1986 Tax Reform Act and by the 1988 temporary regulations.

This Portfolio analyzes in detail what types of organizations are exempt from tax and what kinds of income received by such organizations are exempt from tax. There is an extensive analysis of the issues raised by the regulations under §892 and the ambiguities still present in the law. Tax planning suggestions are also presented and analyzed.

This Portfolio also discusses §893, which exempts employees of foreign governments and international organizations from income tax, and §895, which exempts foreign central banks from income tax. It also raises the possibility of exemption through income tax treaties and other international agreements.

U.S. Income Taxation of Foreign Governments, International Organizations and Their Employees allows you to benefit from:

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area
• Invaluable practice documents including tables, charts and lists
• Plain-English guidance from world-class experts
• Real-world and in-depth analysis that lets you explore various options
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
• Alternative approaches to both common and unique tax scenarios

This Portfolio is part of the Foreign Income Portfolios Library, a comprehensive series containing more than 90 Portfolios, which covers critical transactions and issues in international taxation. This highly-regarded resource service offers commentary on a wide range of foreign income topics including: Foreign Tax Credit, Business Operations in more than 40 foreign countries, Branch ProfitsTax, Source of Income Rules, Subpart F (Controlled Foreign Corporations), Foreign Partnerships and Partners, Transfer Pricing, and more.

Detailed Analysis

I. Introduction

A. International Sovereign Immunity

B. Basic Statutory Provisions

1. Section 892

2. Section 893

3. Section 895

II. Exemption from U.S. Income Taxation of Foreign Governments and International Organizations Under § 892

A. Background

B. Scope of the § 892 Exemption

C. Exempt Organizations under the Temporary Regulations

1. "Foreign Government" vs. "Foreign Sovereign"

2. "Integral Parts" of a "Foreign Sovereign"

3. "Controlled Entities" of a "Foreign Sovereign"

4. Pension Trusts for Employees of Foreign Governments

5. "Political Subdivisions" and "Transnational Entities"

D. Exempt Income of Foreign Governments

1. Types of Income

a. Bank Interest

b. Income from Stocks, Bonds, or Other Domestic Securities

(1) Partnership Issues

(2) USRPHC and REIT Issues

c. Income from Financial Instruments

d. Special Issues

(1) USRPIs

(2) Notional Principal Contracts

2. Investment Sources vs. Commercial Activities

3. Cultural Events

4. Purchase of Goods

5. Not for Profit Activities

6. Governmental Functions

7. Activities Other than Trade or Business

8. Portfolio Investments

a. Dealer Activities

b. Volume of Transactions

c. Banking, Financing, etc. and Effectively Connected Activity

d. Trading

e. Real Property Activities

9. Controlled Commercial Entities

E. Exempt Income of International Organizations

F. Effective Date Issues

G. Tax Reporting

H. Withholding

III. Exemption from U.S. Income Taxation of Compensation of Employees of Foreign Governments and International Organizations Under § 893

A. Scope of the § 893 Exemption

B. Filing Requirements

C. Waiving the § 893 Exemption

IV. Exemption from U.S. Income Taxation of Foreign Central Banks Under § 895

V. Other Exemption Possibilities

A. Income Tax Treaties

B. Other International Agreements

Working Papers

Table of Worksheets

Worksheet 1 S. Rep. No. 313, 99th Cong., 2d Sess. 415 (1986)

Worksheet 2 H.R. Rep. No. 841, 99th Cong., 2d Sess. (Vol. II), II-654 (1986) (Conference Report)

Worksheet 3 Qualifying International Organizations

Worksheet 4 Form W-8EXP, Certificate of Foreign Governments or Other Foreign Organization for U.S. Tax Withholding

Bibliography

OFFICIAL

Statutes:

Treasury Regulations:

Treasury Revenue Procedures and Revenue Rulings:

Cases:

Reports and Treatises:

UNOFFICIAL

Periodicals:

1950

1952

1954

1961

1963

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1993

1996

1997

1998

1999

2000

2003

2007