International Tax Reform: The Baucus Proposals

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In November of 2013, Chairman Max Baucus, U.S. Senate Committee on Finance, released a discussion draft on international tax reform. Some of the stated goals of this discussion draft included (i) reducing incentives for U.S. and foreign multinationals to invest in, or shift profits to low-tax foreign countries rather than the United States, (ii) increasing the ability of U.S. businesses to compete against foreign businesses in foreign markets, and (iii) ending the lock-out effect by taxing the foreign income of U.S. businesses either immediately when earned or not at all. The discussion draft included several proposals that would dramatically change the current U.S. international tax rules, including two separate models for international tax reform, Option Y and Option Z.

This webinar presented by Joseph Calianno and Michael Cornett, provides U.S. corporations and practitioners with an overview of the proposals included in the discussion draft and how such proposals could impact a U.S. based multinational group if enacted.

During this recorded webinar, Calianno and Cornett and will cover:
• Options Y of the discussion draft which will include a discussion of the proposed participation exemption for U.S. corporations, proposed reforms of the subpart F regime (including a discussion of new categories of subpart F income for U.S. related income and low-taxed income) and proposed reforms to the foreign tax credit regime.
• Option Z of the discussion draft which will include a discussion of the proposed reform the subpart F regime designed to end deferral with certain preferential treatment for subpart F income related to active foreign market income, and proposed changes to the foreign tax credit regime.
• Other proposed changes to the international tax system that would occur under the discussion draft whether Option Y or Option Z is chosen as the model for reform, including certain changes to the international tax rules relating to the “check-the-box” rules” that are frequently used in international tax planning, the PFIC rules, the sourcing rules, (additional changes to )the subpart F and foreign tax credit regime, as well as proposals relating to preventing base erosion.
• The treatment of previously deferred income.

Educational Objectives:
• Identify the needs for international tax reform;
• Navigate the various options under tax reform proposals authored by Max Baucus
• Recognize how various international tax rules would change under the reform proposals;
• Distinguish aspects of the proposals authored by Baucus from that of Chairman Camp; and
• Recall basic terms and definitions under U.S. international taxation rules.



Joseph Calianno. CPA, MBA, JD, LLM Tax, is a Partner and International Technical Tax Practice Leader in the Washington National Tax Office of Grant Thornton LLP.  He practices in all areas of International Tax, with an emphasis on cross-border transactions.  He currently is the Chair of the American Bar Association’s  Foreign Activities of U.S. Taxpayers Committee and previously was the Chair of the American Institute of Certified Public Accountant’s International Tax Technical Resource Panel.   Mr. Calianno previously served as a Special Counsel to the Deputy Associate Chief Counsel (International) in the Office of Chief Counsel at the Internal Revenue Service.


Michael Cornett CPA, JD, LLM Tax,is a principal in the International Tax group in the Washington National Tax office of KPMG LLP. He began practicing in the federal income tax field in 1984 with an emphasis in international tax issues since 1988. Specific areas of substantive expertise include subpart F planning, cross border transactional planning and structuring, mergers and acquisitions (domestic and international), joint venture structuring, entity classification, check the box planning, intangible property planning, and electronic commerce issues.  Mr. Cornett previously served as a Special Counsel to the Associate Chief Counsel (International) in the Office of the Chief Counsel at the the Internal Revenue Service.